CHICAGO - An organization representing the eight states and two Canadian provinces that surround the Great Lakes announced a partnership Friday with former U.S. Treasury Secretary Henry Paulson to recruit foreign manufacturing investment to the region.
The Council of Great Lakes Governors and The Paulson Institute, based at the University of Chicago, will try to exploit growing interest in China and other emerging economies in making "direct investments" in advanced nations. Such investments - which often involve buying or expanding plants and other assets - have greater potential to create jobs than bond holdings bought or sold through paper transactions, Paulson said.
"The U.S. overall is not getting its fair share" of those kinds of Chinese investments, he said in a phone interview from Chicago, where the governors' organization was meeting. "A lot is going to other developing nations, or Europe, or Canada. And the Midwest is not getting a fair share of what is coming" to the U.S. in comparison to states such as Texas and California, he added.
Governments' ability to attract investors is limited by the need to avoid favoring one company over another, he said. Still, they can play a significant role - especially in helping mid-tier companies with limited experience in dealing with overseas investors and partners.
"There's room for a sophisticated clearinghouse, one that is really quite strategic about some specific capabilities a state has and matching those with the right people in a foreign country," he said.
Less than $2 billion of China's foreign direct investment was in U.S. companies in 2005, but that total had grown nearly eight times by 2013. So this is a good time for a stepped-up campaign to lure investments that would boost Great Lakes manufacturing and employment, said Michigan Gov. Rick Snyder, co-chairman of the council.
"We have an outstanding manufacturing base," led by automobiles but including a wide variety of other products, Snyder said. "There's a good opportunity for more of this kind of direct investment in the Midwest."
China's notoriously polluted environment offers especially promising prospects, Paulson said. The Michigan-based auto industry is a leader in developing systems that reduce emissions, and the Great Lakes region is becoming a hub for research and production of clean-water technology.