Inward FDI and regional performance in Europe after the Great Recession

Crescenzi, Riccardo ORCID: 0000-0003-0465-9796 and Ganau, Roberto (2024) Inward FDI and regional performance in Europe after the Great Recession. Cambridge Journal of Regions, Economy and Society. ISSN 1752-1378

Text (rsae038) - Published Version Available under License Creative Commons Attribution. Download (3MB)

Abstract

This paper looks at inward foreign direct investment (FDI) and regional labour productivity in the aftermath of the Great Recession, exploring two FDI-induced effects. The first effect is linked with a capacity of FDI per se to trigger short-term productivity gains in response to a global shock. The second effect is associated with the degree of industrial diversification of these investment flows. The results suggest that it is not the amount of foreign investment received per se that matters for productivity recovery but its composition. A low degree of FDI diversification helped regions to gain productivity after the shock. The effect is stronger in regions with an industrial profile concentrated in a limited number of sectors, particularly in services. FDI can support regional recovery, but in the short run, it does so by matching and reinforcing existing regional specialisation profiles and to the benefit of services-oriented regions.

Item Type:	Article
Additional Information:	© 2024 The Author(s)
Divisions:	Geography & Environment
Subjects:	G Geography. Anthropology. Recreation > G Geography (General) H Social Sciences > HB Economic Theory
JEL classification:	F - International Economics > F2 - International Factor Movements and International Business > F20 - General R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
Date Deposited:	16 Sep 2024 10:03
Last Modified:	08 Nov 2024 12:24
URI:	http://eprints.lse.ac.uk/id/eprint/125406

Actions (login required)

View Item