Valuing Foreign Investment

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Let´s shift attention away from the amount of jobs created and focus on the linkages to the local economy. This means valuing local sourcing of materials with high added-value. Small and medium-sized enterprises are proven to show stronger linkages with the local economy they inhabit. Large enterprises have a larger tendency to obtain their materials from international suppliers through corporate networks. Striving for local economic development makes us tackle the challenge of being responsible about what economic activities contribute to a sustainable future within a community.

My short experience with this topic is based on research done during my thesis looking at local economic development in Medellin, Colombia. Specifically, the Export Processing Zone (EPZ) in Rionegro, next to the international airport. A study of approximately 80 companies within the EPZ concluded that the types of companies that generated the most backward linkages with the local economy were those that were capital-intensive, service sector companies.

The study was a basic approximation to measuring linkages, yet it could be improved in many ways and will not delve on that here. Yet it is a starting point for me to further test this idea that when we allow foreign companies, be it in Colombian EPZ’s or Wal-Marts in Anywhere, USA, we should look at how that move actually generates growth and develops talent at the local level.

By the way, I know I’m new to this so if you have any comments for me,  I would appreciate them!

 

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