USA Country Market
Insights and Opportunities
Marketplace: An abundance of natural resources and skilled labor have helped the U.S. become the leading industrial power in the world. Its highly diversified and technologically advanced industries include petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, and mining.
The strength in the financial services industry has made New York’s Wall Street a global capital for foreign investment on a par with London and Hong Kong.
Reasons Foreigners Invest in the United States:
U.S. economic policy generally welcomes foreign investment, viewing it as a means to promote capital formation, employment, productive capacity, and new technology. To reduce risks, companies and individuals spread their investments worldwide.
The U.S. is viewed by many as the ultimate haven for preservation of capital because of its political and economic stability. Since the 1990s, foreign direct investment has increased dramatically. Outlays by foreign direct investors to acquire or to establish U.S. businesses were $161.5 billion in 2006, up substantially from $91.4 billion in 2005. Outlays in 2006 were the fourth largest recorded and the highest since 2000, when new investment was a record high of $335.6 billion. A key factor in this growth is the large, reasonably homogenous, and largely unfettered market available in the United States.
The United States has some of the world’s most sophisticated advertising and distribution systems. There are no internal customs or trade barriers and no foreign exchange controls. Many foreign companies invest to benefit from the spending habits of American consumers. Some exporters to the United States, wary of protectionism, have built, or are considering building, U.S. manufacturing plants in order to protect their position in the U.S. marketplace.
Industries: The U.S. has an abundance of natural resources that have been used to develop a host of homegrown industries that have expanded their operations aboard.
Timberlands have been cultivated to contribute to forest products, wood, and paper. Oil, natural gas, and coal reserves have fueled the development of multinational energy companies. Rivers power hydroelectric plants, and the moderate temperatures and fertile soil have been cultivated to develop an extensive agricultural industry in fruits, vegetables, and livestock.
New York is the undisputed financial capital of the U.S. and has been instrumental in developing public stock exchanges as well as financial products and services that are used worldwide.
Silicon Valley, in California near San Francisco, has become the center of high technology research and development, from silicon chips that run computers and software to venture capitalists that invest in and nurture young start-up companies.
The demand for products and resources has led to the growth and development of consumer-product companies, ranging from automobile and aerospace manufacturers to retailers that offer a range of household products and commercial needs.
Future Trends: Foreign interest in establishing a business presence in the U.S. is expected to continue in light of proposals to institute import restrictions and voluntary import curbs and despite increases in reporting requirements.
One trend to watch is the emergence of multinational corporations from developing countries. Exports of Third World multinationals are increasingly competitive with those of the United States, Europe, and Japan. As these companies develop from simply exporting to manufacturing abroad, they most likely will seek to establish and protect a stake in the American market.
The level of sophistication of foreign businesses coming to the United States has increased substantially over the past decade. Yet newcomers, as well as seasoned investors, will undoubtedly continue to confront new problems and challenges.