U.S. Direct Investment Abroad: Trends and Current Issues

U.S. Direct Investment Abroad: Trends and Current Issues. Congressional Research Service, Library of Congress. James K. Jackson. June 29, 2017

The United States is the largest direct investor abroad and the largest recipient of foreign direct investment in the world. For some Americans, the national gains attributed to investing overseas are offset by such perceived losses as offshoring facilities, displacing U.S. workers, and lowering wages. Some observers believe U.S. firms invest abroad to avoid U.S. labor unions or high U.S. wages, but 74% of the accumulated U.S. foreign direct investment is concentrated in high-income developed countries. In recent years, the share of investment going to developing countries has fallen. Most economists argue that there is no conclusive evidence that direct investment abroad as a whole leads to fewer jobs or lower incomes overall for Americans. Instead, they argue that the majority of jobs lost among U.S. manufacturing firms over the past decade reflect a broad restructuring of U.S. manufacturing industries responding primarily to domestic economic forces.

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The Case for an American Productivity Revival

The Case for an American Productivity Revival. Peterson Institute for International Economics. Policy Brief, 17-26. Lee G. Branstetter and Daniel Sichel. June 2017

Labor productivity in the United States has been dismal for more than a decade. But productivity slowdowns are nothing new in the United States, and, like all its predecessors, the current slowdown will also come to an end as a new productivity revival takes hold. Four developments have the potential to contribute to faster productivity growth in the United States: improvements in the healthcare system, the increasing use of robots, a revolution in e-learning, and the globalization of invention. The authors gauge the potential productivity impact of these developments and suggest that US labor productivity growth would likely rise from the 0.5 percent average rate registered since 2010 to a pace of 2 percent or more. This outcome is more likely to depend on a supportive policy environment. The federal government should expand its support of basic scientific research; allow more immigration by highly skilled scientists, engineers, and entrepreneurs; and preserve America’s longstanding commitment to open trade and investment policies. It should also strengthen the safety net rather than pare back support for workers displaced by the innovations that will drive future productivity growth. If they avoid policy errors, President Trump or his successor could have the good fortune of presiding over a productivity revival. [Note: contains copyrighted material].

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Why Do People Oppose Globalization?

Why Do People Oppose Globalization? YaleGlobal. Farok J. Contractor. June 15, 2017

Politicians are reaping gains by wrapping themselves in flags and directing hostility toward globalization. “Humankind is developing an emerging ‘global consciousness’ – a collective sensitivity to noble thoughts as well as to phobias and ignoble protectionism,” explains Farok Contractor, a professor of global management at Rutgers University. Contractor describes how responses to global connections divide societies. One example is the embrace of Valentine’s Day by many consumers in Asia while some religious fanatics in India target foreign practices for eroding cultural traditions. Likewise, voters in rural United States and Britain, areas with few foreigners, fell prey to scaremongering about immigration while the more educated and wealthy in cities may be less threatened by multicultural ideas. Angst over job losses, stagnant wages and changing industries is real, but unscrupulous media and populists manipulate audiences by blaming globalization, trade and immigration rather than automation or the quest for modernization by majorities in many countries. Contractor concludes that “Globalization is a symptom of human desire and ambition leading to ever-increasing connections.” Nations that resist globalization, rather than engaging in thoughtful examination and policymaking, will encounter many negative consequences. [Note: contains copyrighted material].

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Meet The Out-Of-Work: Local Profiles of Jobless Adults And Strategies to Connect Them to Employment

Meet The Out-Of-Work: Local Profiles of Jobless Adults And Strategies to Connect Them to Employment. Brookings Institution. Martha Ross and Natalie Holmes. June 22, 2017

Even in the midst of a prolonged economic expansion with a low national unemployment rate, jobs are not always available and not everyone who wants work can find it. Both job availability and demographics vary markedly around the country, yielding diverse local populations wanting and/or needing work.

This analysis aims to deepen understanding of out-of-work Americans, and support local officials in their efforts to help these individuals find jobs. The authors provide a unique perspective on adults ages 25-64 who are out of work in each of 130 large cities and counties across the United States, using cluster analysis to segment the out-of-work population into distinct groups based on factors such as educational attainment, age, work history, disability, English language proficiency, and family status. They present detailed information on these groups accompanied by information on appropriate and effective workforce development programs in order to help local officials, funders, and other stakeholders develop, strengthen, or diversify strategies to connect their residents to employment. [Note: contains copyrighted material].

[PDF format, 48 pages, 2.87 MB].

Options for Small Business Tax Reform

Options for Small Business Tax Reform. Urban Institute. Mark J. Mazur. June 14, 2017

Mark Mazur, Director of the Urban-Brookings Tax Policy Center, testified before the US Senate Committee on Small Business during a hearing entitled “Tax Reform: Removing the Barriers to Small Business Growth.” In his testimony, Mazur presented a review of the principles of desirable tax policy, basic findings about businesses in the United States, how the tax system affects smaller businesses, and possible reform options to aid smaller businesses. He outlined several provisions that might be included in a tax reform package, including increasing limits for start-up and organizational expenses, allowing a simpler method of cash accounting for smaller businesses, and establishing basic income reporting rules for payments between businesses. [Note: contains copyrighted material].

[PDF format, 12 pages, 559.6 KB].

Ladders, Labs, or Laggards? Which Public Universities Contribute Most

Ladders, Labs, or Laggards? Which Public Universities Contribute Most. Brookings Institution. Dimitrios Halikias and Richard V. Reeves. July 11, 2017

Why are taxpayers asked to subsidize postsecondary education? After all, college graduates continue to earn much more on average than those who do not gain a postsecondary degree. One answer is that higher education provides public benefits in addition to high private returns on postsecondary investments.

In particular, universities act as ladders for social mobility, which makes for a more dynamic and fairer society. They are also laboratories for research, expanding our knowledge in directions that can improve the welfare of the broader population. A good case can be made for public support for institutions that act in one or both of these ways: as what we label either ladders or labs. But there are some institutions that cannot claim to be either mobility-boosters or knowledge-creators: these are the laggards. These institutions have a weaker claim on the public purse.

In this paper, the authors evaluate the nation’s selective public four-year universities—using newly-available tax data from the Equality of Opportunity Project at Stanford to gauge mobility and an independent ranking from the Carnegie Foundation to assess research activity—to determine which universities are ladders or labs, and which universities are laggards less deserving of public funding. [Note: contains copyrighted material].

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Governance and Ownership of Significant Euro Area Banks

Governance and Ownership of Significant Euro Area Banks. Peterson Institute for International Economics. Policy Brief, 17-18. Nicolas Véron. May 2017

European policymakers and analysts often appear to assume that most euro area banks are publicly listed companies with ownership scattered among many institutional investors, a structure in which no single shareholder has controlling influence and that allows for considerable flexibility to raise capital when needed. Such an ownership structure is indeed prevalent among banks in advanced countries such as Australia, Canada, the United Kingdom, and the United States. Veron shows, however, that listed banks with dispersed ownership are the exception rather than the rule among the euro area’s significant banks, especially if one looks beyond the very largest banking groups. The bulk of these significant banks are government-owned or cooperatives, or uniquely influenced by one or several large shareholders, or otherwise prone to direct political influence. As a result, the public transparency of many banks is low, with correspondingly low market discipline; they have weak incentives to prioritize profitability; their ability to shore up their balance sheets through either retained earnings or external capital raising is limited, resulting in insufficient capital flexibility; they take unnecessary risks due to political interference; and their links with governments perpetuate the vicious circle between banks and sovereigns, which has been a key driver of the euro area crisis. [Note: contains copyrighted material].

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