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Is Foreign Direct Investment Resilient Post the COVID-19 Pandemic? The Case of a Subnational Economy

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  • Roxana Wright

    (School of Business, Plymouth State University, Plymouth, NH 03264, USA)

  • Chen Wu

    (School of Business, Plymouth State University, Plymouth, NH 03264, USA)

Abstract

The disruption brought about by the COVID-19 pandemic has been unprecedented in its global reach and unique impacts. While the literature has addressed the disruption effect on FDI at the country level, we provide a unique dive into the presence and development of FDI at a subnational location. We use detailed data on spatial and industrial distributions of FDI in the U.S. state of New Hampshire and find support for all our hypotheses related to post-disruption recovery and resilience. Given the varied impact of the pandemic on FDI across locations, and the heterogeneity in local conditions, we contend that the subnational recovery depends on the impact of the disruption and happens at varying levels and timelines. While the literature documented that foreign businesses choose to embed in their local host environments, few studies have considered empirically how the level of local integration affects FDI recovery after disruption. We propose that subnational locations with a high level of integration maintain relative strength in FDI post-disruption. The COVID-19 pandemic disruption presents an opportunity to evaluate FDI resilience. We postulate that existing FDI and spatial agglomerations of FDI-related activities impact the post-disruption resilience of FDI at a subnational location. The analysis concludes on actionable insights for researchers and practitioners regarding how to navigate the FDI inflows and activities at their specific location.

Suggested Citation

  • Roxana Wright & Chen Wu, 2024. "Is Foreign Direct Investment Resilient Post the COVID-19 Pandemic? The Case of a Subnational Economy," JRFM, MDPI, vol. 17(1), pages 1-29, January.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:1:p:21-:d:1313969
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    References listed on IDEAS

    as
    1. Xufei Ma & Tony W Tong & Markus Fitza, 2013. "How much does subnational region matter to foreign subsidiary performance? Evidence from Fortune Global 500 Corporations’ investment in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(1), pages 66-87, January.
    2. Song, Sangcheol, 2022. "Determining investment size and local embeddedness under host market uncertainty and growth rates," International Business Review, Elsevier, vol. 31(2).
    3. Roxana Wright, 2022. "Subsidiary Activities: Parent Company and Local Predictors of Business Resilience ," GATR Journals jber226, Global Academy of Training and Research (GATR) Enterprise.
    4. Anna Lamin & Grigorios Livanis, 2013. "Agglomeration, catch-up and the liability of foreignness in emerging economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(6), pages 579-606, August.
    5. Bussy, Adrien & Zheng, Huanhuan, 2023. "Responses of FDI to geopolitical risks: The role of governance, information, and technology," International Business Review, Elsevier, vol. 32(4).
    Full references (including those not matched with items on IDEAS)

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