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When the rain comes, don’t stay at home! Regional innovation and FDI in the aftermath of the Great Recession

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  • Crescenzi, Riccardo
  • Ganau, Roberto

Abstract

Global connectivity is necessary for innovation to thrive. However, in response to external shocks, economies reduce external exposure and focus resources on internal markets. This closure is in contrast to the need for innovative solutions for recovery. We explore this paradox by looking at regional innovation in the United States in the aftermath of the Great Recession. We compare foreign direct investment (FDI) with similar domestic, inter-state investment to assess whether a ‘local innovation premium’ is associated with global connectivity vis-à-vis domestic linkages. We show that what matters for post-crisis innovation is active internationalisation through outward FDI and congruence in technological capabilities between connected territories.

Suggested Citation

  • Crescenzi, Riccardo & Ganau, Roberto, 2025. "When the rain comes, don’t stay at home! Regional innovation and FDI in the aftermath of the Great Recession," LSE Research Online Documents on Economics 128136, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:128136
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    More about this item

    Keywords

    innovation; foreign direct investment; domestic investment; great recession; regions; USA;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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