When he described the energy goals this year, he broadened the priority by connecting energy to global climate change, as well as national and economic security.

Market forces may do some of what is called for: US citizens used less gas in 2006 than in 2005, thanks to higher prices. But European-style taxation to accelerate change in supply and demand has not garnered much support. The political forces sound more inclined to give a big boost to ethanol. Whether that will translate into support for a global market for ethanol or support for other biofuel sources remains to be seen. In any event, clean energy appears likely to attract political capital that may translate into investment assistance as well as government induced market incentives. With emerging markets also becoming substantial energy consumers, the opportunity for cross-border investment and technology transplanting should continue to grow. US companies are said to be planning substantial increases in research and development spending. The amount likely to be invested abroad may depend somewhat on whether an increase in the H-1B visa programme remains in the immigration reform package.

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In addition to disagreeing with the president’s Iraq strategy, the official Democratic response to his State of the Union speech used the dramatic growth in the difference between CEO and line worker compensation (alleged to be a change from 40x to 500x) to set a foundation for an economic populist message. This was echoed by Swiss clergy attending the World Economic Forum in Davos. There are other data points that document an increasing angst in the US middle-class: college-educated professionals who lose a job can expect a 15% salary decrease in the next job; foreclosure rates and consumer debt service costs are rising; home sales have been falling; defined benefit retirement plans are scarce; and job security, at least in the private sector, is an oxymoron.

The impact of negative messages in an economy that is in part fuelled by consumer spending (and confidence) may prove problematic. Will it lead to a globalisation backlash and a chilling effect on FDI or will it lead to more innovative policies to enable and even cushion mobility within the workforce?

Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and served in the public sector as director of White House operations.

E-mail:malachuk@oxford-analytica.com