Global Production Reconfiguration: Automation, Disruptions, and Sustainability as Drivers of Outward FDI Decline

Global Production Reconfiguration: Automation, Disruptions, and Sustainability as Drivers of Outward FDI Decline | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Global Production Reconfiguration: Automation, Disruptions, and Sustainability as Drivers of Outward FDI Decline Weronika Łebkowska This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7613987/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Outward foreign direct investment (FDI) from advanced economies has contracted in recent years, raising questions about the stability of global production networks and the geography of comparative advantage. Such declines are often interpreted, at least in part, as indicative of reshoring, defined as the reallocation of production from foreign to domestic or proximate locations. This study presents the first country-sectoral panel analysis to jointly assess the technological, geopolitical, and institutional drivers of outward FDI contraction. A novel dataset covering 31 OECD countries and 16 manufacturing subsectors (Nomenclature of Economic Activities (NACE) Rev. 2) over 2013–2023 is assembled from harmonized international sources. Reshoring intensity is proxied by year-over-year declines in outward FDI flows, while key explanatory variables capture domestic automation (robot adoption), exposure to geopolitical and trade-related disruptions (novel geopolitical disruptions indicator), and sustainability performance (progress on Sustainable Development Goals (SDGs) 8, 9, 12, and 13). Estimates from panel random- and fixed-effects specifications, supplemented by instrumental variable techniques, show that automation and exposure to global disruptions are consistently associated with declines in outward FDI, reinforcing their role as key drivers of reshoring. Productivity also enters positively, though mainly as a control reflecting broader competitiveness effects. By contrast, sustainability alignment exhibits weaker and more context-dependent associations, reaching significance only in selected specifications. These findings provide integrated evidence on the structural forces reshaping international production and offer policy-relevant insights into the reconfiguration of global value chains. JEL Classification: F21, F23, O33, C23, C26 Outward foreign direct investment Reshoring Global value chains: Automation Geopolitical risk Sustainability International production Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7613987","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":517255234,"identity":"13536f13-739c-4096-af09-08062e4a6246","order_by":0,"name":"Weronika 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Sustainability, International production","lastPublishedDoi":"10.21203/rs.3.rs-7613987/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7613987/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eOutward foreign direct investment (FDI) from advanced economies has contracted in recent years, raising questions about the stability of global production networks and the geography of comparative advantage. Such declines are often interpreted, at least in part, as indicative of reshoring, defined as the reallocation of production from foreign to domestic or proximate locations.\u003c/p\u003e\n\u003cp\u003eThis study presents the first country-sectoral panel analysis to jointly assess the technological, geopolitical, and institutional drivers of outward FDI contraction. A novel dataset covering 31 OECD countries and 16 manufacturing subsectors (Nomenclature of Economic Activities (NACE) Rev. 2) over 2013–2023 is assembled from harmonized international sources. Reshoring intensity is proxied by year-over-year declines in outward FDI flows, while key explanatory variables capture domestic automation (robot adoption), exposure to geopolitical and trade-related disruptions (novel geopolitical disruptions indicator), and sustainability performance (progress on Sustainable Development Goals (SDGs) 8, 9, 12, and 13).\u003c/p\u003e\n\u003cp\u003eEstimates from panel random- and fixed-effects specifications, supplemented by instrumental variable techniques, show that automation and exposure to global disruptions are consistently associated with declines in outward FDI, reinforcing their role as key drivers of reshoring. Productivity also enters positively, though mainly as a control reflecting broader competitiveness effects. 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