The latest study by the McKinsey Global Institute reveals some astonishing facts concerning contributions of U.S. global companies to the American economy. According to the report:
- With their share less than ONE percent of the total number of U.S. companies, U.S. international companies employ almost 20 percent of the U.S. private sector labor force.
- That small portion of U.S. global companies has accounted for nearly half of total U.S. merchandise exports since 1990 and contributes over 70 percent of our private sector’s R&D spending.
These benefits from going global should not be taken for granted. It takes determined political leadership to fight protectionism and ensure an entrepreneurial environment that fosters innovation and enhances competitiveness. To this end, President Ronald Reagan left a gentle but acute message for America in the last year of his presidency: “A creative, competitive America is the answer to a changing world, not trade wars that would close doors, create greater barriers and destroy millions of jobs. We should always remember: Protectionism is destructionism.”
America finds itself in a new era of international competition and a rapidly evolving global economy. Other countries are freeing their markets and advancing their economic freedom at a faster pace than before. Unfortunately, the U.S. is, in many respects, moving in the opposite path, simultaneously burdening its economy with increasing government expenditures, onerous regulations, uncompetitive tax rates, and barriers to trade and investment. It is not coincidental America has been losing ground in key measures like the Index of Economic Freedom and other competitiveness indicators.
President Reagan’s words couldn’t be more relevant to our situation today. We must not shy away from the current challenges of pursuing greater economic freedom that ensures “a creative, competitive America.” That is the choice that will reinvigorate our economy.