Boost Foreign Direct Investment
Last month's announcement by Boston-Power that it would move 30 jobs out of Central Massachusetts and focus its growth plans on China was not a shock to many. After all, China has a big problem with pollution and wants more electric vehicles, powered by the kind of lithium-ion batteries Boston-Power makes.
To sweeten the deal for Boston-Power, the Chinese government – through a stimulus plan – will be giving the company grants, low-interest loans and tax incentives. In return, Boston-Power will create hundreds of new jobs in China. Now that’s a stimulus plan that yields direct benefits.
In short, the Boston-Power announcement reinforces that when you’re in business, you go where the money is – as well as the demand. And as China’s economy continues to grow, Beijing is becoming more aggressive in its efforts to attract international businesses.
Massachusetts has been adopting a little of that philosophy in trying to entice more direct foreign investment. Along with boosting exports, attracting international businesses to invest in the Bay State has been, and should continue to be, a top priority.. The commonwealth has reached out to more than 20 nations to promote trade and investment here. The Patrick Administration has initiated agreements with seven of them, and the governor himself has traveled abroad on trade missions to talk up the benefits of investing in Massachusetts. Those efforts are starting to pay off with more inquiries and more interest in Massachusetts companies.
In an increasingly global economy, the Bay State has a lot to offer foreign investors, beginning with an educated workforce and a culture of innovation. The relative strength in the state’s labor market is also a plus, as a recent Bloomberg survey underscored. The survey cited Massachusetts as the fourth friendliest state for employment from 2008 to 2010, behind only Alaska, North Dakota and South Dakota.
The Worcester Business Journal’s recent seminar, Doing Business in China, focused much attention on how Massachusetts companies can move into and grow their stakes in the Chinese market. Some are doing so while also growing jobs here at home. But the risk lies in potential job losses when China’s terms for doing business in their country try to drive job growth to its people. The deal that Boston-Power was offered would be hard for most of us to turn down. But too much of that can negatively impact the domestic economy. For example, Massachusetts lost a net 88,600 jobs from 2001 to 2010 because of the United States’ growing trade deficit with China, according to a report last month by the Economic Policy Institute (EPI), a think tank based in Washington, D.C. Central Massachusetts was particularly hard hit, EPI noted.
The United States certainly has financial and political weapons to deal with the trade gap with China, although it has to tread lightly because of the delicate economic balance between the two countries. But while dealing with that vexing issue, it’s also incumbent upon states like Massachusetts to step into the vacuum and begin to generate more foreign investment here, no matter which continent or country it comes from. The Massachusetts International Academy in Marlborough is one example of China’s presence in the region. The Chinese government-sponsored college preparatory program bought the former Verizon conference center on Locke Drive for $9 million in 2009 and has plans for growth.
As Ken Brown, the executive director of the Massachusetts Office of International Trade & Investment, told our gathering last month: “We need to affirmatively be out there to promote (foreign direct investment) in Massachusetts. The rest of the world is not standing still.”
As Central Massachusetts, like the rest of the United States, continues a slow recovery from the recession while trying to avoid falling into another one, it should welcome investment from all worthy sources, especially foreign entities with money to invest in our innovative economy.
WBJ Web Partners
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