Full Title: Foreign Direct Investment, Infrastructure, and Supply Chain Resiliency: A New Nexus for US Industrial Strategy
Author(s): Amin Mohseni-Cheraghlou
Publisher(s): Atlantic Council
Publication Date: April 1, 2022
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The United States’ aging infrastructure is currently unable to support the kind of economic growth and productivity it needs to successfully compete with other advanced and emerging economies. This includes the present state of nontraditional infrastructure, such as the semiconductor industry; and recent shortages have highlighted US dependency on foreign producers. Inbound FDI stock in the United States has grown over the past decade, but the rate of FDI inflows has slowed down over the last five years: a decline of 71 percent between 2015 and 2020—while annual FDI inflows into competitors such as China have increased by 20 percent.
The well-being of the US economy depends heavily on immediate and massive investments in the US infrastructure. Therefore, promoting FDI both domestically and internationally must play a key role in the United States’ infrastructure and supply chain resilience strategy. It would in turn increase the productivity, efficiency, and competitiveness of the US economy, contributing to its sustained appeal as a leading FDI destination in the second quarter of the twenty-first century. The recent $1 trillion infrastructure law is a step in the right direction, but the government should also spur private investments in US infrastructure, both domestic and FDI, through various incentive programs.