Income divergence and global connectivity of U.S. urban regions

Buchholz, Maximilian; Bathelt, Harald; Cantwell, John

doi:10.1057/s42214-020-00057-7

Cited by 13 publications

(11 citation statements)

References 62 publications

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“…Accordingly for high-income cities (top 25%), OFDI activity is 2–5 times higher than for low-income cities (bottom 50%). In a comprehensive statistical analysis, Buchholz et al (2020) confirm that the association between urban income and the level of OFDI activity differs by city-region type. Strong disparities exist between these urban types, with higher-income city-regions being characterized by consistently high levels of OFDI activity and lower-income city-regions having low OFDI levels.…”

Section: Introduction: International Investments and Urban-regional D...mentioning

confidence: 64%

“…We explain why OFDIs can have positive income effects in the home (investing) region and why we believe that there is no plausible micro-level mechanism to suggest that OFDI is merely endogenous to economic development. Instead, we suggest a co-evolutionary conceptualization to explain the link between investment activity and urban-regional income levels via local capability building (Buchholz et al , 2020). Accordingly, successful investment activity abroad can trigger local income growth and, at the same time, provide incentives for more investments in the future, thus creating a virtuous development cycle.…”

Section: Introduction: International Investments and Urban-regional D...mentioning

confidence: 99%

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OFDI activity and urban-regional development cycles: a co-evolutionary perspective

Bathelt

Buchholz

Cantwell

2022

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Purpose While conventional views of foreign investment activity primarily relate to efficiency-seeking investments, the authors argue that most other outward foreign direct investments (OFDIs) likely have positive effects on income development in the home region. Data on the US urban system not only illustrates this but also shows that this impact is not equal in all city-regions. The purpose of this paper is to develop an explanation as to why high- and low-income cities are associated with self-reinforcing cycles of OFDI activity that have different home-region impacts. Design/methodology/approach Conventional views assume that inward foreign direct investments (IFDIs) have a positive impact on target regions, while OFDIs are often treated as the flip side of this story, being seen as having negative effects by shifting jobs and income abroad. This paper counters this logic by developing a conceptual argument that systematically distinguishes different types of OFDIs and relates them to economic development effects in the home (investing) region. Findings Using a co-evolutionary conceptualization, this paper suggests that many high-income cities are characterized by a virtuous cycle of development where high, successful OFDI activity generates both positive income effects as well as incentives to engage in further OFDIs in the future, thus leading to additional income increases. In contrast, it is suggested that low-income cities are characterized by what we refer to as vicious cycles of development with low OFDI activity, few development impulses and a lack of incentives and capabilities for future investments. Originality/value This paper develops a counter-perspective to conventional views of OFDI activity, arguing that these investments have a positive impact on regional income levels. The authors develop a spatially sensitive explanation which acknowledges that OFDIs do not trigger a linear process but are associated with diverging inter-urban development paths and may contribute to higher levels of intra-urban inequality. From these findings, the authors derive conclusions for future research and public policy.

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Section: Introduction: International Investments and Urban-regional D...mentioning

confidence: 64%

Section: Introduction: International Investments and Urban-regional D...mentioning

confidence: 99%

OFDI activity and urban-regional development cycles: a co-evolutionary perspective

Bathelt

Buchholz

Cantwell

2022

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“…The global economy exhibits a highly uneven geography (Buchholz, Bathelt, & Cantwell, 2020; Moretti, 2012; Rosés & Wolf, 2018; World Bank, 2008). When investigating innovation processes at the country and continent level, for instance, not only can an enormous acceleration be identified during the 2000s, but this acceleration also occurred in a highly uneven fashion.…”

Section: How Economic Geography Structures Strategymentioning

confidence: 99%

“…From an economic geography perspective, such cluster‐ or city‐connecting strategies play a role in maintaining each location's knowledge specialization and its localized competitive advantages. Organizational linkages of MNEs across places create a global system of clusters and city‐regions along with a clear distinction between core and peripheral nodes (Bathelt & Li, 2014; Buchholz et al, 2020). On the one hand, these global cluster networks connect particularly knowledge‐rich locations (such as Shanghai and Shenzhen in China with Toronto and Vancouver in Canada) and enable them to generate new leading‐edge knowledge and thus extend their competitive advantages.…”

Section: Strategies To Leverage Spatial Opportunitiesmentioning

confidence: 99%

The interplay between location and strategy in a turbulent age

Bathelt

2022

Global Strategy Journal

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Research Summary The spread of protectionist policies and the COVID‐19 pandemic force policymakers and managers to fundamentally rethink the relationship between location and strategy. We examine this location‐strategy interplay through a structure‐agency perspective by investigating how the economic landscape shapes and, simultaneously, is shaped by firm strategies. Increasing spatial disparity and diversity of innovation and wealth in clusters and city‐regions create both tremendous challenges and opportunities for multinational enterprises to strategically leverage knowledge over space. Locational choices and actions of multinationals, in turn, affect regional economic development paths and geographies of innovation. We argue for deep dialogue and collaboration between economic geography, international business and strategy to untie the knots in the intricate interplay between location and strategy and solve the grand challenges in our turbulent age. Managerial Summary The wide spread of protectionism and the COVID‐19 pandemic have disrupted global value chains unprecedently, forcing policymakers and firm managers to rethink the relationship between business strategies and locations. We suggest that this relationship can be understood in a bilateral way. The concentration of innovation and economic activities in city‐regions and clusters creates big challenges but also tremendous opportunities for multinational enterprises. Multinationals need to direct knowledge across space but also have to deal with local resistance and opposition. The choices and actions of these firms are shaped by and, simultaneously, influence spatial patterns of economic activities. We argue for deep collaboration between economic geographers and international business scholars to solve the grand challenges for business, community and society in our turbulent time.

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“…In order to benefit from innovation and value creation, home countries need to rely on an open and connected knowledge system that ensures knowledge inflows and reciprocal exchange especially with other key nodes or hubs in the relevant industry. Particularly in recent times, outward FDI has raised incomes in the metropolitan areas in the US, with a cumulative effect that has been strongest in medium-to-high income cities, due to the advantages of greater international knowledge connectivity (Buchholz, Bathelt, & Cantwell, 2020 ). Among global cities, there is a positive association between international knowledge linkages and local knowledge connections within metropolitan areas, as measured by patent citations (Cantwell & Zaman, 2018 ).…”

Section: Geography Of Value Creationmentioning

confidence: 99%

The local co-evolution of firms and governments in the Information Age

Lundan

Cantwell

2020

J Int Bus Stud

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The governance structures of the value-creating activities of MNEs have evolved towards more networked forms that are geographically highly concentrated and involve partnering with diverse actors. The experimentation that takes place within these corporate networks has a parallel on the government side, where subnational governments, and particularly cities as hubs of economic activity, have increased their profile and level of cooperative activity. We argue that engagement in these partnerships is an essential way in which firms and governments co-evolve and create the basis for sustainable economic growth in the Information Age. While the origins of this collaborative form of governance reside in the increasing knowledge intensity of value creation, its implications go far beyond MNE value creation and capture, extending to issues of global governance such as climate change and sustainable development goals. We examine the implications of this process of co-evolution both in terms of the costs of developing the requisite corporate capabilities as well as the legitimacy of these efforts as part of a deliberative democracy.

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Income divergence and global connectivity of U.S. urban regions

Cited by 13 publications

References 62 publications

OFDI activity and urban-regional development cycles: a co-evolutionary perspective

OFDI activity and urban-regional development cycles: a co-evolutionary perspective

The interplay between location and strategy in a turbulent age

The local co-evolution of firms and governments in the Information Age

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