Competing in the Global Marketplace

February 2, 2012 By Joel Paque

What do American businesses need to compete in today’s global marketplace?  A recently released report by the Department of Commerce, entitled “The Competitiveness and Innovative Capacity of the United States,” looks at the factors that have spurred U.S. economic growth in the past, and that could help jump start a new era of competiveness for the future. The report finds three areas where the federal government is essential to increased competitiveness and provides recommendations for how to improve each of these areas:

  1. Federal support of research and innovation;
  2. Education; and
  3. Modern infrastructure

However, the report only briefly touches on another set of government tools essential to this conversation—the role of diplomacy and development in increasing U.S. competiveness abroad.

Half of U.S. exports today are to the developing world, and trends reveal those markets will grow at a far faster pace than many of our more traditional partners.  China, Europe, Brazil, and India all recognize the future of the global economy is in the developing world, and are investing heavily in becoming the economic partner of choice across Africa, Asia, and South and Central America. Success in these emerging and developing markets is central to the future of American economic competitiveness.

In a recent report published by the Council on Foreign Relations on U.S. Trade and Investment Policy, a task force of trade and foreign policy experts outlined seven pillars to make the U.S. more competitive. While some of the proposals focus on domestic challenges like those in the Commerce report, the CFR task force goes further and acknowledges that the government can play an important role in creating and supporting an environment conducive to U.S. exports. For example, the authors highlight the value of “Greater efforts to promote exports through more competitive export financing and a more active government role in supporting U.S. overseas sales.” These activities are largely funded by the International Affairs Budget–the Export-Import Bank (which provides export financing) and the State Department (which promotes U.S. businesses and a good business environment).

American businesses need a wide array of tools to succeed in these new environments, and the International Affairs Budget supports essential government programs to help U.S. businesses compete abroad. These programs promote American exports and investment, support economic reforms overseas to open markets, contribute to the development of stable, democratic societies governed by rule of law, and help grow the number of middle class consumers through poverty alleviation programs–all of which are essential for U.S. companies to thrive. While investments in research, education, and infrastructure are also essential component of competiveness, we mustn’t overlook the other tools required to help make sure the latest U.S. innovations and products are able to access the fastest growing markets.