Storper on the Counterintuitive Truth About Global Investment

Urban Planning Distinguished Professor Michael Storper co-authored an article about the impact of international investment on domestic employment levels for the London School of Economics’ Global Investments and Local Development blog. “The world over, public policies for recovery from COVID-19 have cherished the idea of curbing foreign activities of domestic firms in order to boost domestic employment and wages. This represents a fundamental misconception about outward foreign direct investment,” Storper wrote with scholars Riccardo Crescenzi and Roberto Ganau. The authors conducted an in-depth analysis of U.S. local labor markets, detailed in a paper recently published in the Journal of Economic Geography. They found that firms with direct investment in other countries create jobs at home, a counterintuitive fact in an era of populism and calls for curbing global economic integration. The authors noted, however, that there is a downside in the form of increasing intra-regional inequalities between high-skilled and low-skilled workers.

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