A post by our Business Consultant Olivia Scotti about the role of international companies in post-COVID recovery and the benefits they provide to local economies.
One of the first victims of COVID-19 was international business.
In an era of mounting economic and political nationalism propelled by fears of the virus, it is understandable. Countries which previously had been strong proponents of globalism and an increasingly connected global market (think: much of Europe) are now seeing a surge in “made nationally” campaigns. Companies are reassessing their global value chains, and reshoring is getting trendier by the day.
It’s logical, therefore, that countries wanting to rebuild in the post-COVID era would push for the return of production, promote national brands, and prioritize national companies. No one has been a more vocal supporter of this logic than Donald Trump – even since long before the coronavirus hit.
But does this logic hold up?
The short answer: no. Far from being a threat to the national economy, international companies may well be the key to post-COVID recovery.
Let’s look at the example of the United States.
International companies in the United States
During a recent webinar by the Council of American States in Europe (CASE), Aaron S. Brickman, Executive Vice President of the Global Business Alliance provided the following statistics about international companies with branches in the United States:
- International companies represent 25% of U.S. exports
- They have created 61% of all new manufacturing jobs in the past five years
- They have been responsible for 16% of U.S. private-sector research & development
- 19% of all U.S. corporate income tax revenue comes from international companies
- Their employee compensation is 26% higher than the private-sector average
To put it simply: international companies in the U.S. create more manufacturing jobs than domestic companies, they pay their workers better than domestic companies, and they are responsible for a quarter of the U.S.’s shrinking exports.
In the words of Mr. Brickman: “Global connections are poised to preserve U.S. jobs, and inbound companies are in a position to jumpstart the U.S. economy, thanks to their remarkable job stability.”
International companies & COVID efforts
Furthermore, multinationals like Sanofi, GSK, Ericsson, Umicore, and Grifols have been spearheading COVID-19 treatment and mitigation efforts – both in the U.S. and around the world. We have not seen contributions from domestic companies to the same degree, owing, mainly, to their domestic nature: their limited reach necessarily restricts their access to resources (including information), thereby restricting their capabilities.
The key to recovery, then, is not economic nationalism, as many are preaching, but an increase in internationalization. Global business, it turns out, is in our best interest.
At Gedeth, we’ve known this for years – and we’ve been promoting the importance of international business to anyone who would listen since the beginning of the crisis. We believe in internationalization because we’ve seen it work in more than 1,000 projects for both FDI and trade. Contact us to learn more and to learn how to make internationalization work for you.