Soul-searching over U.S. competitiveness: much attention and hand-wringing have come over U.S. capital markets' perceived loss of stature. Committees are studying the issue and considering change, but the evidence of a swoon is far from conclusive.

• Author: Cheney, Glenn Alan
• Position: CAPITAL MARKETS

A global economy has always seemed like a good idea, and the best part was being at the center of the universe, so to speak--in the U.S., or, depending on your point of view, in New York City, the financial capital of the world.

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But something's been happening. The uniquely immense American capital markets have recently begun to lose their domination over global finance. In 2000, half of the value of global initial public offerings was raised in the U.S. Just six years later, it was down to 5 percent.

Of the world's 10 largest IPOs in 2006, only two were American companies, and only one--the second smallest--listed first on a U.S. market. Ten years ago, more than 40 percent of the capital raised in the top 10 countries was raised in the U.S. Today, that share is under 30 percent.

If New York City Mayor Michael R. Bloomberg and Sen. Charles E. Schumer (D-N.Y.) weren't already worried about melting glaciers flooding Wall Street, they're now worried about whether it matters. Concerned that "The City" was going to see its second-strongest industry (after real estate) become a historical has-been, the mayor and senator commissioned a report on weaknesses in the U.S. markets and the strategies that will help them compete with the growing global tide.

The findings were less than encouraging. Though the migration of IPOs hardly constitutes a stampede, the movement is apparently in a direction other than toward New York. With a chill that just might refreeze those glaciers, Bloomberg and Schumer wrote in the introduction to their report, "... if we do nothing, within 10 years, while we will remain a leading regional financial center, we will not longer be the financial capital of the world."

The fear of being reduced to mere regional leadership is widespread but hardly unanimous. Thomson Financial has analyzed the trend over the past 20 years and found "little evidence that foreign issuer IPOs have been shying away from the U.S. market" since the enactment of the Sarbanes-Oxley Act. The study found that foreign IPOs accounted for 16 percent of all IPOs in the U.S. last year, the highest proportion in the 20-year review. It also found that foreign IPOs represented 23 percent of IPO volume in the country last year, the highest level since 1994.

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In contrast to Thomson's optimistic report, various concerned institutions, ad hoc commissions and prominent individuals have looked into the matter and produced reports shorter on positive news and longer on dread. They see American competitiveness waning as European and Asian markets wax. And, as they try to identify the causes, three words pop up often enough to sound like a bad poem: globalization, regulation, litigation.

Raising Alarms

Among the organizations raising alarms is the U.S. Chamber of Commerce. The Chamber...