Bringing Capacity Back In: Paradiplomacy and Sub-State Government Internationalization in the Global Economy

Abstract Why do some sub-state governments establish offices abroad for international economic development, while others do not? This article focuses on the paradiplomatic policy of sub-state government internationalization (SGI) that allows sub-state governments to build international networks abroad to promote greater trade, investment, and tourism within their borders. Moving away from autonomy-focused explanations, this article develops three capacity-based hypotheses about the adoption and size of sub-state internationalization. Using an original dataset of the 517 sub-state governments within the Organization for Economic Co-operation and Development (OECD), the analysis reveals that revenue, human capital, and information capacities are significant in predicting SGI. These findings help paint a novel picture of sub-state internationalization in the globalized economy, showcasing a new methodological and theoretical approach for the study of paradiplomacy and sub-state decision-making.