U.S. Companies (should/should not) be Allowed To Move Factories Overseas?

Technology progression, trade expansion, fiscal policy, and human resource growth all affect U. S. competitiveness policy. They have to be made part of a broader public policy agenda. In a 1993 meeting by fellow cabinet members, U. S. Trade envoy Mickey Kantor allegedly asked “Who are my clients American companies or American personnels? ” The question really had nothing to do with customary labor-management disagreement and everything to do with the multifaceted issue of determining business population in an increasingly globalized financial system (Daniel F. Burton Jr. , 2004).

Questions have also arisen concerning just how foreign are the foreign-owned U. S. subsidiaries that are becoming better and better contributors to the U. S. financial system. Are not these subsidiaries, for all intents and purposes, American companies? This globalization tendency is further than just a topic of debate between business economists. It carries important public strategy implications. Should U. S. trade, technology, and tax policies favor U. S. firms over foreign-owned U. S. subsidiaries? How ought to foreign speculation in the United States be treated? Ought to the U.

S. government be in the business of serving U. S. firms invest overseas? These questions are extremely multifaceted. Nonetheless, an appraisal of the pertinent financial data and a methodical analysis of the public policy implications create the following conclusions (Glenn Hubbard, 2000). First, U. S. multinational corporations stay behind considerably more “national” than “multi” and are main engines of growth for the U. S. economy. Second, lots of foreign-owned U. S. subsidiaries are playing a gradually more significant role in our economy; their presence ought to be welcomed.

But monetary, legal, cultural, and management-accountability realities will distinguish many foreign-owned U. S. subsidiaries from U. S. companies for the predictable future (Peter Merrill, 2002). Third, as part of the U. S. government’s labors to take away foreign trade barriers, U. S. officials have to also seek to get rid of foreign asset barriers. And fourth, U. S. government technology programs must equilibrium a preference for contribution by U. S. companies with a requirement to be open to any company, in spite of of people, that can provide high value-added manufacture and technology resources to the American economy.

These findings and proposals should be part and parcel of any broader agenda to improve our country’s competitiveness as increasing our national normal of living. Corporate Nationality The debate over corporate nationality (namely, to which countries, if any, do multinational corporations pay allegiance) has been around for some time. It most recently resurfaced in 1990 in a debate among several prominent academicians two of whom now serves in senior policymaking positions in the Clinton Administration (Jack Mintz, 2005, pp. 7-35).

Reich argued that multinational corporations have become so internationally oriented that they no longer serve as effective vehicles for improving national economic well-being. What is good for U. S. multinationals is no longer necessarily good for the United States. Accordingly, the U. S. government should treat American multinationals no differently than it treats foreign corporations with subsidiaries in our country. Both economic and national security considerations require U. S. policymakers to differentiate between U. S. and foreign-owned corporations (Glenn Hubbard, 2000).

The answer to the question of whether American multinational corporations have become so “multi” that their success or failure no longer has much impact on the American economy is a conclusive no. The fact cannot be denied that, over the last thirty years, an increasing percentage of U. S. multinational corporations’ operations have moved overseas. The most recent Commerce Department data also reveal that American multinationals keep their highest-wage jobs and their critical R;D activities here at home. Compensation per employee is almost one-third higher in U. S. parent (i. e. , U. S.

-based) operations than in the foreign affiliates of U. S. companies, and U. S. parent process account for 88 percent of all American multinationals’ R&D expenditures (Roseanne Altshuler, 2005, pp. 7-35). Consequences for U. S. Economy The achievement or failure of foreign-owned U. S. subsidiaries can also have great penalty for the American economy, though. Take the automotive sector. According to a current study by the Association of International auto Manufacturers, foreign-owned automobile plants in the United States contribute 500,000 jobs and $10 billion value of asset to the U. S.

financial system (Glenn Hubbard, 2000). Competition in Foreign Markets Controversy has been created over suggestions to link foreign investment right of entry to the United States with U. S. investment access to additional countries. A new study by the Congressional Office of Technology Assessment (OTA), entitled, Multinationals and the National Interest: Playing by dissimilar Rules, concluded that “wide asymmetries” have developed in the “policy regimes” of main trading nations in terms of foreign straight investment and other economic policies. Do those American companies which invest overseas stay behind American?

Are they boosting America’s financial well-being when they set up sharing, production, and R;D facilities abroad? Should the U. S. government be in the trade of helping U. S. multinational business invest overseas? The answer to these questions lies in a sympathetic of the competitive requirements of contemporary business. They cannot allow their overseas competitors to earn monopoly profits in secluded home markets profits which their competitors can then use to under price U. S. firms in additional markets. Competing in foreign markets need, in turn, that U. S. companies be talented to freely invest there.

Foreign asset can also, of course, give U. S. firms access to additional countries’ foremost technologies (Roseanne Altshuler, 2005, pp. 7-35). Foreign Investment Barriers Foreign speculation barriers are different extensively. According to the American Chamber of trade in Japan, foreign investment obstacles in that country comprise exclusionary business put into practice and underlying structural barriers. Conclusion Eligibility supplies such as these are there in the U. S. government’s Advanced Technology Program, which was created in 1990 to fund advanced technologies that have a important possible for humanizing the competitiveness of U.

S. businesses. Legislation that makes bigger these criterions to all federal profitable technology programs and combined industry-government research plan could be helpful. The underlying intention should be to equilibrium a favorite for participation by U. S. companies with a need to be open to any company (in spite of of nationality) that can offer high value-added manufacture and technology resources to the American financial system.


Daniel F. Burton Jr. , Erich Bloch, Mark S. Mahaney, 2004, Multinationals: the “who is us” debate. Glenn Hubbard, “Comments on Sen. McCain’s Tax Policy Toward U. S.Multinationals,” Tax Notes, March 6, 2000. Peter Merrill, “U. S. Tax Policy and International Competitiveness,” testimony before the Committee on Ways and Means, U. S. House of Representatives, February 27, 2002 Roseanne Altshuler and Jack Mintz, “U. S. Interest Allocation Rules: Effects and Policy,” International Tax and Public Finance, Vol. 2, No. 1 (2005), pp. 7-35. Glenn Hubbard, “Comments on Sen. McCain’s Tax Policy Toward U. S. Multinationals,” Tax Notes, March 6, 2000. Roseanne Altshuler and Jack Mintz, “U. S. Interest Allocation Rules: Effects and Policy,” International Tax and Public Finance, Vol. 2, No. 1 (2005, pp. 7-35.

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