Recommendations > Recommendation Detail

The Challenge: The U.S. Is Falling Behind in the Race to Attract Investment

The U.S. became the largest economy in the world by being the best place for companies to invest and grow.

  • Multi-national companies headquartered in the U.S. account for 17.8% of total U.S. employment and contribute 70% of R&D, 44% of exports, and 29% of total capital investment.
  • Subsidiaries of foreign companies represent less than 1% of all U.S. firms, but account for nearly 5% of private sector jobs, 11% of capital investment, 14% of R&D and 18% of goods exported.  And their jobs pay an average of $71,000 – about one-third more than the economy-wide average.

In the late 1990s, the U.S. attracted nearly 26% of global foreign direct investment (FDI), but that figure has dropped roughly a third, to about 18%, today. Economic trends and financial crises have certainly played a role in this decline, but the bigger factor is that competition for FDI is stiffening. While countries around the world aggressively court foreign investment as a matter of national strategy, the U.S. just hasn’t thought that way.

Jobs Council Recommendation: Launch a National Investment Initiative to Attract One Trillion Dollars in Foreign Direct Investment over the Next Five Years

Changing economics give the U.S. a chance to regain lost FDI market share. In both manufacturing and services, recent studies have found that the U.S. is rapidly closing the cost gap between low-cost U.S. locations and off-shoring centers. In addition, the U.S. has a host of advantages that can be freshly marketed to promote such inward investment and encourage U.S. multinationals to expand domestic investment and job creation.

The Council calls for a National Investment Initiative (NII) to capture this opportunity. The primary goal we propose for the NII is to attract one trillion dollars of foreign direct investment over the next four to five years, which would be a 20-25% increase over recent trends.

Leverage Local Advantages through Innovation Investment Zones

The Jobs Council recommends leveraging advantages locally through the creation of “Innovation Investment Zones.” Located near major universities, these zones would offer a unique environment for companies to do business and create jobs. Zones could magnify economic activity and benefits through leading edge tech transfer practices as well as competitive tax policies.

Establish Supply Chain Partnerships

Set up partnerships between U.S. companies and the federal government to attract businesses in their supply chain to invest in the U.S.

Upgrade SelectUSA and Improve Coordination between SelectUSA and Individual States

Dramatically upgrade the capabilities of the recently created SelectUSA program, which is meant to be an American version of other countries’ investment promotion offices. Improve coordination between SelectUSA and individual states so we can compete with foreign governments who are investing heavily in attracting FDI.

Improve Immigration Policies to Bring Jobs to the U.S.

Improve U.S. visa policies to allow companies that invest and create here to more easily bring high-skilled workers to our shores.

Explore Tax Reforms to Increase Competitiveness

Reform the Tax System to Attract Investment Explore issues in our tax system to increase the competitiveness of companies that locate in the United States.