In Sunday's Washington Post, George F. Will takes a swat at Obama, arguing that his pro-government policies are "diminish[ing] America's competitive advantages." He writes:
Let's guess: Will a person or institution looking for a place to invest
$1 billion seek opportunities in the United States, where policy
decisions are deliberately increasing taxes, debt, regulations and the
cost of energy, and soon will increase the cost of borrowing and
hiring? Or will the investor look at, say, India. It is the least
urbanized major country -- 70 percent of Indians live in rural areas,
50 percent on farms -- so the modernizing and productivity-enhancing
movement from the countryside to the city is in its infancy. This
nation of 1.2 billion people has a savings rate of 25 to 30 percent,
and fewer than 20 million credit cards. Which nation, India or the
United States, is apt to have the higher economic growth over the next
decade?
Luckily, we don't have to guess! The United Nations actually tracks foreign direct investment, a measure of one country's investment in another. Buying a factory or stake in a foreign company contributes to FDI, and signals an implicit vote of confidence in the future prospects of that country.
So how does the U.S. fare against India? In 2007, the most recent official figures available, India pulled in $23 billion from abroad. That's impressive--but less than one-tenth the United States' $233 billion haul.
"Big deal," you say. "That was pre-crisis. The world was a different place then."
You're right. The better question is, "How is the U.S. investment faring now? Especially now that those Big Government-loving Democrats are destroying America's competitive advantages?" Well, newer FDI numbers aren't available, but we do have data on mergers and acquisitions activity, which makes up the largest chunk of foreign direct investment. And according to Dealogic, in the first half of 2009, the U.S. accounted for 32 percent of global M&A volume. That share is actually six percentage points higher than in the second half of 2008.
So while there is every indication that India has a bright future ahead of it, and will be the lucky recipient of bounties of foreign investment, it doesn't seem as if global investors are canceling their New York-bound flights and buying tickets to New Delhi just yet. Sorry, Will.
P.S. Thanks to avid Twitterer Dan Gross (@grossdm) for the hat tip to Will's column.
