FDI and regional development policy

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The transformations in the worldwide division of labour brought about by globalisation and technological change have shown an unintended negative effect, particularly evident in advanced economic systems: uneven spatial distribution of wealth and rising within-country inequality. Although the latter has featured prominently in recent academic and policy debates, in this paper we argue that the relevance of connectivity (here proxied by foreign capital investments, FDI) for regional economic development is still underestimated and suffers from a nation-biased perspective. As a consequence, the relationship between the spatial inequality spurred by the global division of labour and the changes in the structural advantages of regions remains to be fully understood in its implications for economic growth, territorial resilience and industrial policy. Furthermore, even though connectivity entails bi-directional links – i.e. with regions being simultaneously receivers and senders – attractiveness to foreign capital has long been at the centre of policy attention whilst internationalisation through investment abroad has been disregarded, and sometimes purposely ignored, in regional development policy agendas. We use three broad-brushed European case-studies to discuss some guiding principles for a place-sensitive regional policy eager to integrate the connectivity dimension in pursuing local economic development and territorial equity.

Keywords: FDI; multinational enterprises; regions; connectivity; regional development policy (search for similar items in EconPapers)
JEL-codes: F21 F23 O1 O52 R11 R58 (search for similar items in EconPapers)
Date: 2018-10-29
New Economics Papers: this item is included in nep-fdg, nep-geo, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Published in Journal of International Business Policy, 29, October, 2018, 1(3-4), pp. 157-183. ISSN: 2522-0691

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Journal Article: FDI and regional development policy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:90285

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