NEW YORK - AT least 193,000 employees in New York City work for a foreign-run company, but rising protectionism and the sinking dollar could jeopardise future investments by employers, according to a study.
Although New York City's global ties are 'part of its DNA', the study warned that the city is losing the competition for global influence to other money centres.
Tokyo, which is home to 50 of Fortune Magazine's Global 500 companies, ranked first in global influence among cities, according to the report commissioned by the Partnership for New York City. The pro-business group's report can be found on its website at: http://www.pfnyc.org.
Paris ranked second with 26 corporate headquarters. New York City tied for third with London, with 22 corporate headquarters each, and Beijing was fourth with 18.
Around the United States, nearly half of the foreign employers plan to cut their stakes or shun new investments because they say they see better opportunities in other countries, according to the study authored by London-based consultants DTZ.
The study also cited A.T. Kearney's Foreign Direct Investment Confidence Index as finding that global investors see risks in the United States, including looming protectionism and noted that 'nearly 50 per cent of investors who planned to decrease or hold constant their level of US investment were driven by better overseas investment options, concerns over a major dollar devaluation and a slowing of the US economy'.
In 2006, foreign direct investment in New York City totalled US$58 billion (S$79 billion), about 10 per cent of economic output.
London had nearly double the amount of investment: US$104 billion or 25 per cent of economic output.
Business operations, established in New York City and controlled by foreign owned companies, employed some 193,000 people in 2004, which represented more than one in every 20 jobs in the city.
Data for the period 2004-2007 will be available in 2009, and '... all of the evidence suggests that the number of foreign jobs in New York City will have continued to increase during that period', according to the report.
Finance and insurance attracted almost half of so-called foreign direct investment in New York State, the report said.
The information sector, which includes publishing, broadcasting, telecom and information technology, drew 12 per cent of the foreign dollars.
Manufacturing had a surprisingly large share of 8.3 per cent, which the report said 'may be attributed to the ability of overseas companies to produce goods more cheaply than US companies, even within the US'.
Only companies with a majority of foreign owners, that created jobs, wages and profits were included in the report.
'Policies that restrict foreign ownership are increasingly - and dangerously - in vogue in Washington, D.C.,' the report said, urging New York politicians to extol the benefits of foreign investment during the presidential campaign.
The study also noted opponents of sovereign wealth funds have warned that the foreign governments that control them could have 'potentially devious political motives'. But the report added 'all the evidence' shows there are enough safeguards.
For example, the Committee on Foreign Investment in the United States, which determines whether a foreign investment threatens national security, has 'operated efficiently and effectively since its creation', the study said.
Global sovereign funds, swollen by oil reserves and foreign currencies, hold assets of between US$1.9 trillion and US$2.9 trillion, the US Treasury estimates. But DTZ said it did not include them in the study because all of their stakes are portfolio investments that are below 10 per cent. -- REUTERS
