Watch out for the Belgians.
If we let them get away with their sinister attempt to purchase Anheuser Busch and its iconic American brand -- Budweiser -- we may all soon be speaking Flemish and downing mussels by the barrel.
While nationalistic opposition to InBev's recent $46 billion bid for Anheuser Busch has been remarkable, it has also been predictable. The same kind of reactionary, anti-foreign sentiment has been rearing its head for decades at the intersection of American business and politics.
When the Mitsubishi Estate bought Rockefeller Center in 1989, there was outright panic in some quarters over the influence of Japan in the U.S. economy. Twenty years later, Rockefeller Center is back under the ownership of an American company, and the famous Christmas tree never missed a Season.
With U.S. investors taking advantage of every opportunity to buy up property and businesses overseas, resistance to foreign investment here is widely seen around the world as the height of hypocrisy. But today, beyond just the Budweiser uproar, economic jingoism stands in the way of American global competitiveness and poses yet more self-imposed damage to our economic security. This is particularly true for New York City, the heart of our nation's economic bloodstream, which depends heavily on international commerce and investment to retain its status as the world financial and media capital.
Last week, the Partnership for New York City issued a report titled Foreign Direct Investment: Bringing the Benefits of Globalization Back Home. It argues that anti-globalization sentiment in the U.S. is working against this country's economic interests. It urges those who are concerned about American jobs to speak out on the importance of foreign investment and on the upside benefits for the New York and U.S. economies that are generated from foreign-controlled businesses and sovereign wealth funds.
The report found that jobs and business operations of foreign companies account for more than 10% of the city's economic output, or approximately $58 billion annually as of 2006. It also found that foreign-controlled companies employ nearly half a million people in New York State and 193,000, or more than one in every 20 workers, in New York City.
The Partnership report is the first attempt to measure the economic impact of foreign-controlled business operations, known as Foreign Direct Investment or "FDI," in a U.S. city. The report defines Foreign Direct Investment as job-generating investment where a foreign owner has majority control. From 2002 to 2004, FDI created nearly one in every 7 dollars of new activity in the City. States benefiting most from FDI include California, New York and Texas, followed closely by Pennsylvania, Illinois, Florida and New Jersey.
The report confirms that New York has flourished over the past twenty-five years as a direct result of foreign investment -- in real estate, business and international tourism. London, New York City's chief competitor for status as the world financial center, has done even better -- with more than $104 billion attributable to FDI in 2006. As a result of U.S. policies and politics, many foreign business investors are looking elsewhere for investment opportunities, and jobs are following currency overseas.
Within a generation, the U.S. will no longer be the world's largest economy. Partnerships with foreign-controlled businesses and investors will be more important than ever. China will be larger and is already the most important market for U.S.-based international businesses. Chinese leadership is fed up with U.S. policies and politics that discourage foreign investment in business and real estate, at the same time their country is holding much of our national debt.
Locally, New York is trying to counter this negative sentiment by supporting investment by one of China's largest real estate companies in five floors of the Freedom Tower that is being constructed on the World Trade Center site. The Beijing-based Vantone Group will develop a 200,000 square foot business and conference center designed to encourage business ties between the two nations and to house the Western headquarters of Chinese companies that are going global.
But national attitudes and policies that would restrict foreign ownership and investment remain increasingly, and dangerously, in vogue. As a result, nearly half the foreign investors now operating in the U.S. say they will get better value by directing their resources into other countries. Foreign direct investment is a powerful antidote to the loss of jobs from globalization, bringing the benefits of a global economy back home. And there is a lot to be said for the quality of Belgian beer.
Kathryn S. Wylde is President & CEO of the Partnership for New York City, a non-profit organization of the City's business leaders dedicated to maintaining New York City as a center of world commerce, finance and innovation. The full report is available on the Partnership's web site at www.pfnyc.org.