Daniel J. Ikenson at the Cato Institute highlights the declining share of global investment attracted to the US as developing countries grow more competitive:
The good news is that the $3.5 trillion of foreign direct investment parked in the United States accounted for 17 percent of the world’s direct investment stock in 2011 – more than triple the share of the next largest single-country destination. The troubling news is that in 1999 the United States accounted for 39 percent of the world’s investment stock.
Politicians need to be aware that they are competing, as a country, for new investment against a myriad of other attractive options.
Unlike ever before, the world’s producers have a wealth of options when it comes to where and how they organize product development, production, assembly, distribution, and other functions on the continuum from product conception to consumption. As businesses look to the most productive combinations of labor and capital, to the most efficient production processes, and to the best ways of getting products and services to market, perceptions about the business environment can be determinative.
Their focus should be on minimizing red tape, lowering taxes, stabilizing exchange rates and ensuring competitive prices for basic goods and services. Failure to adapt could lead to a dearth of new investment and the consequent problems now evident in Southern Europe.
Read more at Anemic Business Investment Indicts U.S. Policies | Cato @ Liberty.
