Global Investment as a Recovery Stategy for the Economy

Global investment as a recovery strategy for the economy has been a hot subject and a very real course of action for some time now. As the world becomes smaller and more interconnected, companies located in different countries are looking to invest elsewhere in order to spur growth and open new markets. Both governments and corporations realize that a major result of globalization is that opportunity will be sought overseas.

Sovereign Wealth Funds

An example of global investment for economic stimulus is sovereign wealth funds. These pools of nationally backed investment funds will seek out opportunities abroad. A prime example is the Abu Dhabi sovereign wealth fund's investment in Citigroup back in 2007. These funds are ever-growing in numbers, and their assets will continue to be a force as governments look for returns beyond traditional safe-haven assets. In addition, they will also act as activist shareholders, looking to press corporations for their self-interests, which may lead to potentially dangerous situations--governments may be involved in the day-to-day operations of companies for political purposes.

Overseas Factories

Another example of global investment for economic stimulus is having production facilities in other countries. China is a prime example of companies who relocate production in order to save money. Due to the lax regulations regarding labor and environmental impact, companies realize cost savings. China has taken advantage of this in order to generate massive trade surpluses and to decrease its unemployment rate, utilizing the investment of foreign companies to do so. To an extent, this is also done in Europe. German automaker Audi, for example, has taken advantage of cheaper labor and existing infrastructure in Hungary to produce some of its cars. Other Western European companies have shifted production to Eastern Europe for the same basic purpose. The reason this is so important especially in Europe is that public pensions are partially invested in the stocks of some of their national companies. The public would realize these savings as part of the benefits that they receive during their lifetimes.  

Foreign Investment in the U. S.

Although American companies have long been known for investing abroad as part of their strategies, there has been opposition to foreign companies' attempts to invest in the U. S. For example, the Chinese energy company CNOOC was blocked by the Senate due to concerns about the company's environmental record. Even during the 1980s, Japanese car makers faced a backlash because of the competition that they provided to American companies.

However, competition can be healthy. It can allow a company to bring out the best product at a fair price and let market forces dictate whether the company shall live or die. Competition also brings feedback as to how well the company is doing and whether the investment was worth it. Competition will continue to increase as time goes on, and the only way to win is to allow all the players who aim to compete into the arena.

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