Foreign direct investment, integration in global value chains, and local development by VOX

A new wave of foreign direct investment has swept sub-Saharan African countries, with inflows becoming more diversified both geographically and sectorally. This column presents an analysis that shows a high degree of complementarity between involvement in global value chains and FDI. Policies supporting the entry and upgrading of countries in such chains – especially via a strong institutional setting and a well-educated labour force – can help maximise the spillovers from foreign investment.

Vito Amendolagine, Andrea Presbitero, Roberta Rabellotti, Marco Sanfilippo

The U.S. and international trade: Why did things go sour? (Joshua P. Meltzer, Brookings)

Since 1945, the United States has led international efforts to expand trade and integrate markets, helping underpin U.S. as well as global growth. Yet 2016 Republican presidential nominee Donald Trump is proposing policies that would turn the U.S. away from greater economic integration and likely provoke a trade war. Democratic nominee Hillary Clinton has backed away from supporting the Trans-Pacific Partnership (TPP) Agreement—a 12 nation trade deal signed by President Obama in February 2016.

Restoring Support for International Trade (John Veroneau, CFR)

The politics of international trade have always been complicated. The bashing of trade agreements in last week’s Presidential debate may not fully reflect the views of most Americans, but clearly the political environment for trade is deteriorating. While open markets have been and will continue to be hugely beneficial to the United States, maintaining political support for such markets will require three steps: reframe the case for trade through the eyes of the consumer, refocus trade enforcement through the eyes of companies and workers, and renew the social safety net through the eyes of responsible dislocated workers.