CEPII, Recherche et Expertise sur l'economie mondiale
Thursday May 23, 2024
2.00-3.15 pm - CEPII, 20, avenue de Ségur 75007 Paris
The CEPII research seminar : "Beyond Attraction. Does investment promotion work for FDI retention and expansion ?"

Riccardo Crescenzi
Professor of Economic Geography at the London School of Economics and Political Science (LSE)
Riccardo Crescenzi will present "Beyond Attraction. Does investment promotion work for FDI retention and expansion ?" (co-authored with Marco Di Cataldo, Mara Giua & Juan Alvarez-Vilanova).

Under the surface of stagnating new FDI flows, divestment and expansion of existing foreign activities have maintained a remarkable dynamism over the past two decades, reflecting the ongoing restructuring of key value chains. This paper aims to shed new light on this process of global capital re-allocation by analysing foreign expansions and divestments in Europe. In particular, the paper looks at the role of national and regional Investment Promotion Agencies (IPAs) that have become an increasingly common public policy tool to attract and retain foreign investment. The paper leverages an ad-hoc survey on the structure and strategy of national and regional IPAs in Europe and a new dataset on foreign expansions and divestment. The empirical analysis, based on difference-in-difference models with staggered treatment adoption, exploits the variation in sectoral targeting by IPAs in different European regions, to test whether the strategic targeting of key investment sectors contributes to the expansion and retention of foreign activities. The results suggest that both national and regional IPAs have a positive impact on investment and employment in targeted sectors but with highly heterogenous effects depending on the radius of action of the IPA, its proximity to the investors and their sector of activity.

Contact: conferencesatcepii.fr