The major challenge facing U.S. business is in keeping markets open to investment at a time when many seek to close them, often for protectionist purposes. The U.S. economy benefits enormously from inward investment in terms of jobs created, R&D expenditures and outlays for new plants and equipment. U.S. investors likewise spur world economic growth, ensuring the most productive use of the world’s financial and natural resources.
However, the sheer volume of foreign investment, coupled with the entry of new players often using sovereign wealth funds to place their new-found fortunes, have sparked calls here and abroad for greater governmental control over investment flows. Several governments have tightened regulations regarding foreign investment, while others threaten to do so. Many countries also use informal barriers to restrict outside investment, declaring that certain industries are off limits and must be protected as national champions. Is this the wave of the future? Do we really want investment protectionism?
Congress last year enacted a sensible reform of the process for reviewing the national security implications of proposed foreign takeovers. The Bush administration followed with a major statement – the first in 10 years – reaffirming long-standing U.S. policy of openness to foreign investment. That is the right direction for the U.S. and world economy.