"Does foreign investment hurt job creation at home? The geography of outward FDI and employment in the USA"

Rising political skepticism on the benefits of global economic integration has increased public scrutiny of the foreign activities of domestic firms in virtually all advanced economies. Decisions to invest in new activities abroad are seen by some commentators as potentially detrimental to domestic employment. 

In this paper, published in the Journal of Economic Geography, Riccardo Crescenzi (Department of Geography and Environment, London School of Economics and Political Science), Roberto Ganau (Department of Economics and Management of the University of Padua) and Michael Storper (UCLA Luskin School of Public Affairs) contribute to this debate by scrutinizing the relationship between outward ‘greenfield’ Foreign Direct Investments (FDI) and local employment levels. The analysis, at the scale of USA Economic Areas, finds a generally positive link between outward investment and local employment, but with an important range of differences across regions and sectors. Less developed regions benefit the most from the positive returns of outward FDI, and, particularly, from outward FDI if it is undertaken by firms in high-tech manufacturing and services industries. But there is a downside, in the form of increasing intra-regional inequalities between high-skilled and low-skilled workers in these areas.

Read the full article here