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Outward FDI, the Geography of Jobs, and Regional Development Policy

24 April 2019 at 12:00 PM - 2:30 PM

Room 401, Campus on Viale Romania, 32

Speaker: Simona Iammarino , London School of Economics

Abstract:

"This paper investigates the impact of outward foreign direct investment (OFDI) on domestic employees in Great Britain, by focusing on the distribution of benefits and costs across geographies and occupational profiles. The paper builds on the strengths and limitations of various literatures to propose a conceptual framework that allows to incorporate the role of geography into the analysis of the consequences of OFDI on workers performing different typologies of job tasks. The intuitions emanating from the conceptual framework are then tested on a balanced panel dataset at the local labour market level, exploiting the cross-regional variation in the exposure to relocation threats and information on the job composition of local areas. Our results suggest that OFDI may generate significant job losses in routine occupations in regions that have been more exposed to the relocation of production abroad, while no significant positive effects are associated to job creation in non-routine occupations. MNEs’ global strategies over the functional and geographical slicing up of their value chains act as driver of structural change in their home economies, affecting the trajectories of regional economic development at the subnational level. We discuss our findings in the light of the implications for territorial inequality and development policies"

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