“America first. America first.” So said Donald Trump in his inauguration speech. The president is, one might say, the US economic-developer-in-chief.
I began writing my first contribution to fDi Magazine while attending the SelectUSA 2017 Investment Summit in Washington, DC, and finished editing it just days before the start of renegotiations of the North American Free Trade Agreement. Fitting, because the two predominant investment themes in the US these days are bold aspirations and great uncertainty.
SelectUSA conference speakers were meant to inspire confidence and promote FDI. Common refrains included the rule of law, intellectual property protections, innovation through corporate, government and academic collaborations, market size, low energy costs, workforce diversity, and a cultural dedication to winning. While some of these attributes are shared with other countries, they remain important characteristics of the US value proposition.
Working against these positive attributes are cyclical, structural and political challenges: infrastructure deficits, an ageing workforce and prevalent skills gaps, political and legislative uncertainty, and low unemployment all put the US growth agenda in some jeopardy.
What is likely to happen in the next 18 to 36 months?
Thinking positively, more FDI will flow to the US as companies are convinced of the benefits of being in the country (see above) and believe that conditions might improve further with changes to tax policy, regulation and trade agreements.
On the downside, FDI to the US will be dampened among companies concerned by perceived shortages of talent at all skill levels, or worried that US policymaking will consist of convoluted, convulsive and failed efforts to reform healthcare, overhaul tax policy and restructure trade regimes.
Overall, firm and industry factors may transcend domestic politics and FDI may increase. Costs will continue to rise in traditionally low-cost countries; some consumers will demand domestic products and services; many companies will shorten their supply chains and innovate closer to their customer base; and some firms will ignore the political noise in favour of investing in their biggest market to deploy their most technologically advanced and productive assets and people.
Despite the obvious challenges facing the US, the coming years may yet see it receive more than its fair share of global FDI for all sorts of reasons. Americans are counting on it.
Gregg Wassmansdorf is senior managing director, consulting, at Newmark Knight Frank, a global real estate services firm. He is also a member of the Site Selectors Guild.