Does the ‘foreign’ in ‘foreign direct investment’ matter?
It is seemingly easy to make the case for why metro areas should dedicate resources to attracting foreign direct investment (FDI). Foreign-owned firms pay 20 percent higher wages, on average, than their domestic peers. They also invest more in R&D, representing just 5 percent of employment but 19 percent of corporate R&D spending. But these and other oft-cited benefits of FDI typically have more to do with the strength of multinational corporate firms and the concentration of FDI in high-wage, high-skill advanced industries than with the foreignness of the firm.