When the rain comes, don’t stay at home! Regional innovation and FDI in the aftermath of the Great Recession

Global connectivity is necessary for innovation to thrive. However, in response to external shocks, economies reduce external exposure and focus resources on internal markets. This closure is in contrast to the need for innovative solutions for recovery. We explore this paradox by looking at regional innovation in the United States in the aftermath of the Great Recession. We compare foreign direct investment (FDI) with similar domestic, inter-state investment to assess whether a ‘local innovation premium’ is associated with global connectivity vis-à-vis domestic linkages. We show that what matters for post-crisis innovation is active internationalisation through outward FDI and congruence in technological capabilities between connected territories.