Foreign direct investment is increasing in the United States and is creating well-paying jobs, says Austan Goolsbee, chairman of the White House Council of Economic Advisers.
|Austan Goolsbee stresses that the government must live within its means, "and I think we will likely see substantial deficit reduction. But that should not take away from the number one priority that we must grow and add jobs." (Getty Images Photo)
Ever since the 2009 financial crisis, foreign direct investment, including investments flowing into the manufacturing sector, has shot up 49 percent, making the United States the No. 1 destination in the world.
In 2010, foreign-owned businesses in the United States were home to 5.7 million workers, including 2 million at manufacturing facilities, Goolsbee says.
"It's clear in the data that the United States remains the number one destination for foreign investment in the entire world," Goolsbee said.
"These tend to be jobs that pay well — the average pay is over $70,000 a worker, some 30-plus percent higher than the average pay overall in the economy."
President Barack Obama has fought to lower the nation's unemployment rate, now at 9.1 percent, by encouraging foreign direct investment and boosting exports.
Such investments produce $670 billion in goods and services a year, accounting for nearly 6 percent of total U.S. private output, according to a Council of Economic Advisers report on the subject.
Such projects, be they acquisitions of existing plants or so-called "greenfield" investments, where a foreign entity builds from scratch, have generated an annual $188 billion in capital expenditures, accounting for more than 11 percent of total U.S. private capital investment.
About $40.5 billion has flowed into research and development, accounting for more than 14 percent of the total U.S. private R&D investments.
"The vast majority of foreign direct investment comes from advanced economies because that is where the vast majority of multinationals are located," Goolsbee told reporters on a conference call.
Emerging markets may see greater foreign direct investment growth rates, but when it comes total figures, the United States is dwarfing everyone else. "We have dramatically more investment, on the order of five to ten times higher than most of the emerging markets."
The Obama administration is working to create jobs as the economy still fights to recover from the worst recession since the Great Depression.
"The number one goal on the president's mind, in my experience for years and not just now, has been how do we get the country back to work and how do we get the economy growing," Goolsbee said.
Any plans to narrow the countries fiscal deficits will come with that in mind.
"That is our most important priority. Now an important component of that in the long run, is having the government live within its means, and I think we will likely see substantial deficit reduction. But that should not take away from the number one priority that we must grow and add jobs."
Goolsbee previously has said he plans to step down.
"My number one priority while I have been chair at the CEA — and I hope that the next person will carry it through — is we have to grow and we have to add jobs and we have to add output and export more."
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