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The
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Monday, October 08, 2012
The
Economy
Published September 8, 2011-Updated October 18,
2011
“Globalization and the Benefit to the
American Economy”
by Nathan’ette
Burdine-Follow on
Twitter@nbnylemagazine
Globalization
is a word generally associated with third world countries and not first world
countries like the United States. The
U.S. is seen as being amongst the few nations controlling the globalization
process and setting the rules for such things as free trade amongst nations.
However, the U.S. is like other countries in the world in that it is not
an island amongst its self and it needs the assistance of other nations in order
to survive. Job growth evolves
within the country and outside the country.
The strength of the economy is determined by the amount of products being
made, the amount of products being shipped out, and shipped into the country.
And by sharing knowledge and talent, the U.S. opens its door to other
innovators who can assist with keeping the American economy going.
However, foreign investment is often overlook because it is associated
with the “needy” countries. So
it is difficult for those who view America as a global superpower to have a need
for foreign investment of any kind. The
importance of globalization beyond a third world country’s doors is being
revealed in the important role foreign companies are playing in helping to boost
the American economy.
Foreign
Direct Investment (FDI) is one of the ways to measure globalization’s
importance to the American economy. FDI
is determined by the amount of stock, bonds, and property ownership a foreign
country has in another country. According
to the U.S. Department of Commerce’s Economics and Statistics Administration
division, foreign owned companies employed 5-6 million workers between the years
2000-2010. In 2010, FDI totaled
$194 billion and $1.7 trillion during the last ten years. The countries together totaling 84% of the FDI in the U.S.
are Switzerland, the United Kingdom, Japan, France, Germany, Luxembourg, the
Netherlands, and Canada. While
other European countries comprise 6% of the FDI, the remaining 10% comes from
the Caribbean, Brazil, and Australia.
Manufacturing
is the industry that foreign companies have had the most impact on the American
economy. According to the U.S.
Department of Commerce’s Economics and Statistics Administration division,
foreign direct investment has supported 2 million manufacturing jobs.
Unlike the domestic manufacturing jobs, the foreign manufacturing jobs
have suffered a slight blow of unemployment.
These are high skilled jobs in which workers receive 30% higher pay than
those workers who work for American companies.
As for other industries, FDI supported 489,000 jobs in retail trade,
453,000 jobs in administrative support and waste management, 420,000 jobs in
wholesale trade, and 415,000 jobs in finance and insurance.
Southern
states, like Georgia, have turned to foreign companies in order to boost their
economy. The Atlanta Journal
Constitution’s writer Leon Stafford stated in his article, “State looks
abroad for jobs,” that foreign companies comprised 23% of Georgia’s new jobs
with British companies employing the most Georgians. Germany, Japan, the Netherlands, and France follow Britain in
their employment of Georgians. Japan
has the largest investment, and England has the most facilities in the state.
Other Southern states doing business with foreign countries are Texas and
North Carolina. According to the
U.S. Census’s Bureau Foreign Trade Division, Mexico is Texas’s biggest
trading partner with oil being the largest commodity traded.
Amadeo Saenz Jr., Executive Director of Texas Department of
Transportation, stated that in 2009 the Texas-Mexico trade totaled $208 billion
while the U.S.-Mexico trade totaled $306 billion.
As for North Carolina, Canada is its largest trading partner.
According to the Government of Canada’s website, the North
Carolina-Canada trade totaled $7 billion dollars with a large amount consisting
in the area of medical supplies and pharmaceuticals.
According
to Stafford, Chris Cummiskey (Commissioner of the Georgia Department of Economic
Development) stated that Texas and North Carolina have more foreign investors
because their incentives are slightly better.
So in order to close this gap, Georgia is using the international
importance of Hartsfield-Jackson International airport and the port of Savannah
as a waterway to import and export foreign goods in order to persuade more
foreign investment in the state. In
particular, Governor Deal is looking to persuade South Korea, China, Singapore,
and Dubai. Governor Deal will be
traveling to South Korea and China during the month of October, while his
economic commissioner will be traveling to Singapore and Dubai.
The state is looking to attract more jobs in the areas of aerospace,
alternative energy, and automotives due to the higher salaries these jobs pay.
Hence, the state is banking on the assumed direct relationship between
higher salaries and consumer purchasing. Basically,
if people are paid more, than they will buy more.
Therefore, the money will go back into the economy because consumers will
be working jobs that pay them a high enough salary that will allow them to
purchase more goods in the open market.
Like
Governor Deal of Georgia, Governor Snyder of Michigan sees the benefit of
foreign investment. According to
the Pure Michigan Blog, Michigan is amongst the top ten states receiving
FDI from China. In 2010, Michigan
sold greater than $44 billion dollars worth of goods to China. This represents a 36% increase of sales from 2009.
According to the Detroit News’ writer Paul Egan, Governor
Snyder will be traveling to China on September 24 as well as to Japan and South
Korea as a way to promote Michigan as a good investment state.
The United States is not an island amongst its self
and it cannot survive in the global community without the assistance of other
nations. In fact, the heart of the
U.S. economic principal, capitalism, is commerce without borders or free trade.
The U.S. used this principal during its earlier days, as a young country,
in order to grow. Britain and France were the U.S.’ biggest trade partners
during its earlier days. Today,
these countries continue to contribute to the U.S.' economy through foreign
direct investment. Due to the
U.S.’ earlier embracement of globalization, the country was able to cement
relationships that proved to be beneficial in providing the means to grow the
U.S.’ economy, strengthen its military, and broaden its reach in the
international community. Therefore,
without globalization, the U.S. would not have evolved into the superpower it is
today.
Email-nathanette.burdine@thenylemagazine.com
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