New federal program to help state and local economic development offices

by Andrew Nelson

Subnational governments are no longer alone when it comes to attracting businesses to their jurisdictions.

On June 15, President Obama signed an executive order establishing SelectUSA, a new federal initiative to help local and state government economic development offices (EDOs) increase the amount of foreign direct investment, business expansion, and business retention within their borders.

Until the creation of SelectUSA, the United States was the only developed economy in the world that did not have a national trade promotion and advocacy arm to encourage foreign investment in America. The responsibility of attracting business into the United States was supported by the Commerce Department’s “Invest in America” program, but the bulk of advocacy work was performed by state and local governments.

SelectUSA’s executive director, Barry Johnson, came to Paris this week to promote the new initiative among EDOs that were present at the Paris Air Show.

"Communities need three things to grow: (1) entrepreneurs, (2) an innovative infrastructure, and (3) a support system," says Johnson. SelectUSA's team is designed to create the infrastructure and support system while at the same time helping innovative entrepreneurs navigate federal policies and procedures that have previously inhibited their entry to the U.S. market.

Johnson continued, "We all understand that investment spurs business growth and creates jobs. We also need to learn that investment - including foreign investment - will generate exports from the United States. It doesn't matter if it is a foreign-owned business... it counts as an American export." Additionally, Johnson claims that foreign-owned businesses often pay higher salaries than their American competitors and that although foreign companies account for only 10 percent of business in the United States, they also account for over 18 percent of exports.

SelectUSA is geographically neutral, meaning that the program will not advocate for one American city or region over another competing region. Rather, Johnson's group will provide the same level of support for all 50 states. However, when the choice falls between an American prospect and a foreign city, SelectUSA will step in and provide advocacy.

"At that point, the federal government will step in and say, 'The United States is a great place to do business'... We may have the Secretary of Commerce or even the President make a call to the business," says Johnson.

Johnson says that SelectUSA will act as an ombudsman for receiving feedback from both foreign and domestic enterprises. "Imagine you have an EPA permit that hasn't been processed or you are having trouble obtaining the appropriate visas... SelectUSA will have senior officials from every department, agency, and commission of the federal government to examine what is holding up business development and to see if trends are surfacing. This interagency investment working group will report to the President once a month to find answers to individual problems."

Johnson was also quick to point out, "We can't answer every question or solve every problem."

It is important to note that SelectUSA is not only for foreign companies. "We want to ensure that American businesses stay in America. Part of our goal is business expansion and retention within the United States from companies that are already located here," emphasized Johnson.

To learn more about federal resources available to your company or economic development office, visit www.selectusa.gov.

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What Andrew is up to in Paris this week

Assisting the new executive director of SelectUSA promote the new initiative at the Paris Air Show.

http://twitter.com/#!/USEmbassyFrance

Encouraging personal savings

by Bethany Hansen

I have been thinking lately about what government’s role in personal finance ought to be. I ask myself questions such as: How much responsibility, if any, should government have for taking care of people once they retire? Should government encourage people to save their money? How does government help those who really do need the help?

I had a professor once argue that, essentially, most normal people, even if they tried, would not be able to save enough money for retirement. I find that argument absurd. But let’s assume it were true: then it would follow that government ought to help everyone because they apparently cannot help themselves. However, if we assume it is not true, then it would follow that people ought to help themselves. Could there be an in-between? I think so.

Authors of a Wall Street Journal article entitled “The Other Midlife Crisis” cite data from the US Census Bureau showing that the average worker’s salary plateaus during his or her 40s. That’s right—the big 4-0. That’s quite contrary to what most people plan for, which is the point of the article. Retirement plans tend to revolve around the belief that a worker’s salary will continually increase, so the authors argue that workers need to reevaluate their retirement plans based on the new data.

This is where I think government should step in: encourage people to save more and spend less. It will be better for the people both now and in the future, and it will be better for government to whom everyone turns when they need help but who will be unable to help because it too is strapped for cash.

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No news is bad news

by Bethany Hansen

As a part of my MPA studies, I took a class called Cash Management. Our professor, at least once per class, would talk about the importance of following the news because world events affect financial markets. As future government employees, it was important to know how those changes in the markets would affect government cash flows and investments.

Most small municipalities are unlikely to invest money on their own, but those that do, as well as those who manage state pools, should be aware of news that could affect tax revenue or investments. For instance, bad news about the economy sent the stock market into a decline. The decline is discussed here.

When news of a struggling economy affects the financial markets, government officials at all levels need to ensure that the public money they have invested is in the safest, most sensible investments. This could mean moving investments themselves, or contacting their investment managers to ensure the money is safe.

Public monies should be handled with special care. One step government officials should take to ensure that care is by understanding how world events affect their investments.

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