Expanding the international trade and investment policy agenda: the role of cities and services

Christine Cote, Saul Estrin and Daniel Shapiro

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We explore the public policy implications of two new, significant, and inter-related global phenomena. First, the rising share of services, particularly innovation-driven digital and knowledge-based services, in foreign trade and multinational enterprise activity; and second, the increasingly important role of global cities as home and hosts to these activities. Our framework distinguishes between national economic policies to promote trade and FDI, referred to as economic diplomacy, and comparable policies originating in cities, referred to as city diplomacy. National economic diplomacy has traditionally promoted trade and investment in goods, often through trade agreements and promotion agencies, and we explore the limitations of these tools as trade in services becomes more important. However, we also note that trade in services, particularly innovation-driven services, is concentrated in global cities, and traded between them, often within MNEs. We conclude that national policies on trade and investment cannot be divorced from innovation and knowledge strategies, and that these strategies cannot be divorced from cities. We emphasize that national economic diplomacy should be better aligned with city diplomacy. We also discuss how the transition to stronger city diplomacy may have consequences for firms and their strategies for corporate diplomacy.

Keywords: services; trade and investment policy; economic diplomacy; city diplomacy; global cities; MNEs; corporate diplomacy; ES/S008373/1 (search for similar items in EconPapers)
JEL-codes: L81 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2020-07-06
New Economics Papers: this item is included in nep-cse, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published in Journal of International Business Policy, 6, July, 2020, 3, pp. 199-223. ISSN: 2522-0691

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