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Commerce Department Launches Initiative to Attract Foreign Investment

Inward investment in the United States is the target of a new federal initiative announced on March 7, 2007, in Washington, D.C.

by John Ward

The Commerce Department has launched a new U.S. government initiative to promote the United States as a destination for foreign investment. The initiative was announced on March 7, 2007, by Franklin L. Lavin, under secretary of commerce for international trade. The initiative, Invest in America, will be the primary mechanism by which the government manages the promotion of inward investment in the United States.

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Foreign Investment in the United States.  5 Million: number of workers employed by U.S. subsidiaries of foreign firms.  $29.9 billion: amount spent by U.S. subsidiaries of foreign firms on research and development. 10%: portion of U.S. business capital expenditures accounted for by U.S. subsidiaries of foreign firms.  25%: portion of U.S. capital expenditures in the manufacturing sector accounted for by U.S. subsidiaries of foreign firms.  Source: U.S. Department of Commerce. Figures are for 2004.

“The United States welcomes foreign investment and the jobs and prosperity it creates here,” said Lavin in a speech that day at the Peterson Institute for International Economics in Washington, D.C. “We are seeing increasing global competition for investment flows, and we need to make sure that international investors understand the unique advantages of the United States, including the best workforce in the world.”

Lavin noted that the U.S. economy is among the most open in the world, but, until now, the federal government has played almost no role in attracting and retaining inward foreign investment. “All other major economies have mechanisms such as investment boards and investment promotion activities,” he remarked. “[The] historically passive role [of the United States] toward foreign direct investment is increasingly anachronistic.”

Importance to U.S. Economy

Inward investment, or foreign direct investment, plays an important role in the U.S. economy. Investment from foreign subsidiaries employs more than 5 million American workers. In 2004, the latest year for which data are available, U.S. subsidiaries of foreign firms spent $29.9 billion on research and development activities in the United States. Investment capital represented more than 10 percent of total U.S. business capital expenditures. In the manufacturing sector, that figure is even more important, representing 25 percent.

Key Responsibilities

The Invest in America initiative will be housed in the Commerce Department’s International Trade Administration (ITA). ITA will have three key responsibilities:

1. Conducting outreach to the international investment community

2. Serving as an ombudsman in Washington, D.C., for the concerns of the international investment community and working on policy issues that affect the attractiveness of the United States to foreign investment

3. Supporting state and local governments engaged in foreign investment promotion

The initiative will also include creating a task force within ITA that will be responsible for educating and coordinating the efforts of the 2,300 ITA employees in offices around the world on inward foreign investment.

Advantages of Doing Business in the United States

In announcing the new initiative, Lavin noted a number a factors that make the United States an attractive place to do business. Among those factors are

• Open, secure markets

• Low taxes that encourage innovation and investment

• An open society that attracts and retains top talent

• A high degree of transparency

The initiative would not affect the way the U.S. government addresses individual investments in the U.S. economy that might affect national security. Such investments will continue to be reviewed as appropriate by the Committee on Foreign Investment in the United States (CFIUS), an interagency body established by executive order in 1975 and chaired by the secretary of the treasury. CFIUS reviews and investigates foreign acquisitions of U.S. companies that may threaten to impair U.S. national security. In rare circumstances, CFIUS can recommend that the president suspend or block such transactions so that any identified national security concerns can be addressed.

Coordination with State and Local Governments

Many state and municipal governments are already actively engaged in efforts to attract foreign investment, and the Invest in America initiative will complement those activities. The federal government will not steer prospective investors toward, or away from, any particular investment or investment location in the United States. “That part of the investment decision must be led by the localities,” said Lavin, “The U.S. federal government should remain strictly neutral in any competition among sites within the United States. Our job is to promote the United States in general as a site for investment.”

John Ward is a senior editor in the International Trade Administration’s Office of Public Affairs. Aaron Brickman, director of the Invest In America initiative, assisted with this report.

For More Information

For additional information regarding the Invest in America initiative, visit