Hello! I have a paper and presentation to do. So far, I answered all the questio

Question

Hello!

I have a paper and presentation to do.
So far, I answered all the questions except one that I'm really struggling with.
Here is the question:

-Convincing US firms to serve foreign markets from the US instead of investing overseas.
-Urge firms to serve foreign markets from the US instead of investing overseas.

For this question, you can either support or refute the statement.
I chose to refute, but you can support.

All arguments must present strong data to back up.
I'm struggling to find good arguments and data to back up my points.

I would really appreciate any help.

Thank you.

Explanation / Answer

Although it is a novel idea and we believe that if all US firm invest in US it must be good for the economy. But that is not the case. Companies look for competitive advantage. This advantage might come in –

Now poor and developing countries such as India ,china and ASEAN along with rich middle east are great market and many US companies would like to sell their to make profit.

Let take overall retail as an example. In china retail market size is more than 2.5 trillion dollar while in india it is more 500 billion dollar. This market is growing with very fast rate of >10%.Now if Wal-Mart wants to enter in this market, it definitely needs to invest in these countries.

If wal mart opens a store let’s say in India then it also need to setup warehouse, procurement, retail store office and IT infra to derive the low cost advantage in this market otherwise local players have more market reach, knowledge and connection to beat Wal-Mart.

So without investing in India it will be difficult for wal mart to get market share from exiting player. Without market share there will be no revenue and profit and no tax payment to government. If wal mart or any company makes good profit in overseas market it add to the revenue of federal government in for of tax. Along with it if Wal-Mart or any other company do good then their share holder again US citizen gain immensely in form of capital gain and dividend.

Many US companies such as GE ,Ford,Macdonald,KFC,HTC do invest a lot in their overseas market to derive cost advantagealong with market reach.Assume ford making vehicle in USA then selling it to Middle east while TATA Doing the same in india and then selling it to middle east.Definetily TATA will be able to offer the better vehicle at lower price because labour and other cost in India are low(1/6th of US).

But you see that there are many companies who derive their advantage from technology such as Intel,Boeing,tesla,Microsoft ,Lockheed martin etc still able to sell a lot without investing a lot in overseas market.

Other than this we can understand this from the classical economics perspective. As countries move up the ladder they migrate from agriculture to manufacturing ,from manufacturing to service(this happened in US after 1960) and from service based to high tech.I think this fourth which we call digital revolution is now happening in US.While in manufacturing(Car,ship,soap,electronics) and service(Finance and IT) developing countries are coming PAR with developed world.USA now Boast largest number of startup in Space exploration,AI,Data science,VR,Robotics clean energy.Last year clean energy enterprise employed more than coal miner and growth rate has just scratched the surface.So like companies coutries too create competitive advantage and USA competitive advantage lies in Innovation and entrepreneurship. So USA should create innovators and entreprenuers rather than worrying that where these entrepreneurs are investing.

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