NCPA - National Center for Policy Analysis

Foreign Investment Creates Jobs in America

March 25, 2004

With the furor over call centers in India and threats of trade tariffs abroad, a new study by the Business Roundtable strongly warns against U.S. economic isolation. It says one of the biggest challenges facing the United States is that, in an effort to stem the outsourcing of jobs overseas, policymakers will impose burdensome regulation that will only slow economic growth.

The Business Roundtable, an association of chief executive officers of leading U.S. companies, says that steering clear of protectionist policies is critical. Policymakers must resist counterproductive ideas, such as proposals to impose new tax and regulatory restrictions on how U.S. companies invest and trade worldwide, despite whatever popularity they may hold among their constituents. Instead, the study's researchers say economic policy must be driven by an accurate assessment of the facts:

  • Worldwide sourcing is not a new phenomenon and is not limited to the United States -- in fact, the value of American services sold to other countries is 25 percent higher than those sold to the United States.
  • An open economy brings vital foreign investment -- since 1990, foreigners have invested $1.5 trillion in U.S. companies and foreign firms have created more than 6 million U.S. jobs.
  • Though job growth has been slow, the Bureau of Labor Statistics predicts that the United States will net 21 million new jobs between 2002 and 2012.

Along with avoiding policy missteps, policymakers must promote the things that will generate jobs and economic growth: worldwide trade, education, investment, and innovation. The Business Roundtable says the United States should free up foreign markets, urge economic liberalization worldwide to spur growth, support job training programs to ease worker transitions in the new economy, and boost federal investment in basic research.

Source: "Securing Growth and Jobs: Improving U.S. Prosperity in a Worldwide Economy," White Paper, Business Roundtable, March 2004.


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