This research focuses on the evolution of the composition and location of inward foreign direct investment (FDI), the changes in Investment Promotion Strategies for FDI attraction and retention, and their impacts on post-Covid-19 recovery patterns and productivity. It builds on existing work that links FDI (of different types and different motivations) to productivity.
Inward investment into the UK has traditionally offset our trade deficit, but Covid-19 has fundamentally changed the global economy in ways that are still difficult to predict, including projections of a reduction in global FDI.
This project offers new policy frameworks for the understanding of the contribution of FDI to post-Covid-19 productivity growth, levelling up between regions and inclusivity. For this purpose, the project leverages (virtually) real time FDI data from Moody’s Analytics and an innovative survey on national and regional (LEP) Investment Promotion strategies in order to unveil new trends and impacts on: a) FDI location choices in the UK and in comparison with key global competitors; b) key shifts and impacts in FDI attraction and retention efforts; c) impacts on employment and productivity of the key trends identified in terms of FDI location and corresponding public policies. The project takes a quantitative approach based on state-of-the-art discrete choice models and difference-in-difference and synthetic controls methods in order to model location choices and impacts.
Furthermore, the project takes a multi-disciplinary approach that integrates International Business Studies, Economic Geography and International Economics.
Project lead Nigel Driffield (The University of Warwick)