Foreign Investment: America’s Misunderstood Powerhouse

By Nancy McLernon, President and CEO

The recent surge in Washington’s rhetorical angst around foreign direct investment (FDI) is fast approaching the high-water marks set by the Japanese “invasion” of the 1980s and Dubai Ports World. From news articles that make a point about IRA funds going to “foreign” companies, to fervent tweets and floor speeches deriding foreign direct investments in American R&D, the torrent of negativity illuminates a disturbing trend. 

It is high time we drained the false “Us versus Them” septic that threatens to contaminate one of America’s strongest reservoirs of economic power. 

Foreign companies are pillars of the U.S. economy, directly employing eight million Americans, including 23 percent of all U.S. manufacturing workers. American workers at these companies earn an average of $86,859 in annual compensation; that’s seven percent higher wages than the economy-wide average. And over the past five years, international companies have created more than a quarter-million new manufacturing jobs in the United States, compared to overall U.S. manufacturing jobs, which remained flat during the same time.

The potency of international investment is undeniable. So too are its sources: Seventy-five percent of the $5.25 trillion in cumulative FDI in the U.S. come from companies globally headquartered in eight countries – Japan, Canada, United Kingdom, Germany, France, Ireland, Switzerland, and the Netherlands, all longtime friends and allies of the U.S. These countries are not merely investors; they are strategic partners contributing to America’s prosperity and tranquility. 

Now, translating “foreign” into a four-letter word is nothing new for politicians interested in scoring quick political points. In the current geopolitical environment, and given the antagonistic policy choices being made by America’s adversaries, you do not need a map to see how U.S. policymakers go down a route that starts with foreign and ends with China in the same sentence. 

It might surprise you to know – given the extent to which some politicians invoke it – that Chinese investment in the United States amounts to less than one percent of all global investment here. Today, Chinese investment in the U.S. totals just $45 billion and has declined by 29 percent over the past five years – no doubt coinciding with the expanded effort of the Committee on Foreign Investment in the United States (CFIUS) to safeguard our national security from nefarious investment. 

Although it might be politically expedient to go after the “foreigners” when raising concerns with the Chinese government’s actions, it wrongly disparages companies headquartered all over the globe that are “insourcing” millions of jobs for Americans across the country and in every congressional district. 

We should stop the false “Us vs. Them” narrative and focus instead on who specifically is making the investments in local communities – and who benefits from those investments. 

Take Toyota for example: It is reinvesting an additional $2.1 billion into its operations in Kentucky and North Carolina to build the company’s first three-row, battery electric SUV starting in 2025. 

Enel North America– an energy company globally headquartered in Italy – is investing $1 billion into a solar panel manufacturing facility in Inola, Oklahoma, which will create 1,000 new jobs. Hundreds of new jobs will soon be available thanks to Siemens reinvesting $200 million into operations in Lexington, North Carolina. France-based Michelin is adding 200 jobs to its operations in Junction City, Kansas. 

The list goes on and on. 

No wonder Jim Baker – President Ronald Reagan’s Chief of Staff and Treasury Secretary – once called international investment America’s economic Ace in the Hole. FDI in the United States is not a threat but an opportunity, and literally, 99 percent of it has nothing to do with Chinese firms. 

“FDI in the United States is not a threat but an opportunity,
and literally, 99 percent of it has nothing to do with Chinese firms.”

International companies in America are a resounding endorsement of U.S. workers. Their decision to invest here means a decades-long devotion to making things in America. They represent the promise of new jobs, great pay and stronger ties with our allies. 

In short, global investment is a wave of opportunity if only Washington would harness the world-class know-how and great-paying job opportunities that international companies provide.