Bloomberg News

Companies Expanding Overseas Create U.S. Jobs, Study Says

December 04, 2012

U.S. companies operating internationally help spur economic growth that creates domestic jobs to meet demand in foreign markets, according to a study conducted for two business associations.

When companies trade or invest overseas, it fuels hiring and investment in the U.S., the Business Roundtable and the United States Council for International Business said in the study released today. The groups suggest that U.S. policies and trade agreements be flexible to accommodate opportunities for companies to generate business, products or customers abroad.

“If you think a broad goal for American economic policy should be to try to accelerate economic growth and job creation, we can do that,” said Matthew Slaughter, associate dean of Dartmouth College’s Tuck School of Business in Hanover, New Hampshire. Slaughter prepared the study for the Washington-based Roundtable, made up of chief executive officers, and the New York-based Council, which advocates free-trade policies.

The study is aimed at encouraging U.S. policies that will support American businesses seeking to operate in global markets. President Barack Obama has set a goal of doubling the value of U.S. exports from 2009 through the end of 2014.

“Achieving that future is going to require economic policies across a number of issues -- trade, investment, tax, education -- that are based on a sound understanding of how the success of American companies depends on their global engagement,” Slaughter said in an interview.

Customers, Employees

Slaughter found that after signing up customers overseas, many companies, especially small businesses, add employees to meet the demand.

“Global engagement of companies helps create jobs not just in their own companies, but others that they do business with, through their supply chains,” Slaughter said.

The typical company doing business outside the U.S. buys goods and services from more than 6,000 small businesses, with those purchases valued at more than $3 billion. Today, 26.1 percent of those U.S. companies are classified by the U.S. government as small businesses, the study said.

“To encourage and enable our companies to seek new markets and succeed anywhere in the world, we need tax and investment policies that reflect today’s competitive global economy,” John Engler, president of Business Roundtable, said in a statement.

The report examined statistics from the Bureau of Economic Analysis, academic and policy research and case studies of companies, including FedEx Corp. (FDX:US), Coca-Cola Co. (KO:US), Procter & Gamble Co. (PG:US) and Dow Chemical Co. (DOW:US)

U.S. companies operating abroad had 28.1 million domestic employees, spent $253.8 billion on research and development and had $587.3 billion in capital investments, according to 2010 data, the most recent available, analyzed in the report.

To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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Companies Mentioned

  • FDX
    (FedEx Corp)
    • $154.66 USD
    • 0.62
    • 0.4%
  • KO
    (Coca-Cola Co/The)
    • $41.64 USD
    • 0.14
    • 0.34%
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