Is a Losing Strategy
International investment flows are the key to growth for both the domestic and the global economies. The problem is that the climate for investment in the United States and for R&D partnerships internationally may be getting worse. The chief officer for technology strategy at a major European multinational recently said that American firms are wary of entering partnerships with his company because the Americans risk being denied a federal contract by being linked with a German firm. In fact, he added, the legal obstacles to investing or participating in R&D joint ventures are greater in the United States than in Japan. Clearly, our nation must take a step back and carefully consider what is happening to U.S. investment policy.
In the United States we used to treat all companies equally. But Congress is now drifting toward a policy of treating companies differently based on their nationalities—conditional national treatment (CNT). The standard is not based on the worth of the company, but on the practices of the company's home country. A company from a "bad" country may get penalized. This is a bad strategy for the American economy. We should be encouraging, not discouraging, foreign investment. The United States has benefited disproportionately from the explosion in international investment. A key advantage has been our ability to attract international investment and to provide a climate where transplant companies are welcome, jobs are created, productivity is enhanced, and the industrial base is transformed.
Both Japan and Europe have great companies, but only the United States has the best Japanese, European, and U.S. companies in the same place.
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Publication information: Book title: The Foreign Investment Debate:Opening Markets Abroad or Closing Markets at Home?. Contributors: Cynthia A. Beltz - Editor. Publisher: American Enterprise Institute. Place of publication: Washington, DC. Publication year: 1995. Page number: 36.
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