Factors affecting inward foreign direct investment flows into the United States: Evidence from State-Level Data

• Authors: E. M. Ekanayake , Lucyna Kornecki
• Languages of publication: EN

Abstracts

EN

This paper investigates factors affecting the inward foreign direct investment (FDI) flows among fifty states of the United States. The analysis uses annual data for the period 1997 until 2007. The study identifies several state-specific determinants of FDI and investigates the changes in their importance during the period. Our results show that among the major determinants; real per capita income, real per capita expenditure on education, FDI related employment, real research and development expenditure, and capital expenditure have a significant positive impact on FDI inflows. There is also evidence that the share of scientists and engineers in the workforce exerts a small positive impact on inward FDI flows. In addition, per capita state taxes, unit labor cost, manufacturing density, unionization, and unemployment rate exert a negative impact on FDI inflows.

• Publisher: Katedra Ekonometrii i Statystyki, Szkoła Główna Gospodarstwa Wiejskiego w Warszawie
• Journal: Metody Ilościowe w Badaniach Ekonomicznych
• Year: 2011
• Volume: 12
• Issue: 1
• Pages: 53-66

Dates

published

2011

Contributors

author

E. M. Ekanayake

• Bethune-Cookman University

author

Lucyna Kornecki

• Embry-Riddle Aeronautical University

References

• Axarloglou, K. and Pournarakis, M. (2007) Do all foreign direct investment inflows benefit the local economy? The World Economy 30(3), 424-432.
• Axarloglou, K. (2005). What attracts foreign direct investment inflows in the United States. The International Trade Journal 19(3): 285-308.
• Axarloglou, K. (2004) Local labor market conditions and foreign direct investment flows in the U.S. Atlantic Economic Journal 32(l):62-66.
• Bartik, T. J. (1985) Business location decisions in the United States: Estimates of the effects of unionization, taxes, and other characteristics of States. Journal of Business and Economics Statistics 3:14-22.
• Beeson, P. E. and Husted, S. (1989) Patterns and determinants of productive efficiency in state manufacturing. Journal of Regional Science 29(1): 15-28.
• Chung, W. and Alcácer, J. (2002) Knowledge seeking and location choice of foreign direct investment in the United States. Management Science 48(12): 1534-1554.
• Coughlin, C. C, Terza, J. V., and Arromdee, V. (1990) State government effects on the location of foreign direct investment. Regional Science Perspectives 20:194-207.
• Coughlin, C. C, Terza, J. V., and Arromdee, V. (1991) States characteristics and the location of foreign direct investment within the United States. Review of Economics and Statistics 73:675-683.
• Friedman, J., Fung, H. G., Gerlowski, D. A., and Silberman, J. (1996) A Note on state characteristics and the location of foreign direct investment within the United States. Review of Economics and Statistics 78(2):367-368.
• Head, C. K., Ries, J. C, and Swenson, D. L. (1995) Agglomeration benefits and location choice: Evidence from Japanese manufacturing Investments in the United States. Journal of International Economics 38:223-247.
• Head, C. K, Ries, J. C, and Swenson, D. L. (1999) Attracting foreign manufacturing: investment promotion and agglomeration. Regional Science and Urban Economics 29: 197-218.
• Hennart, J-F. and Park, Y-R. (1994) location, governance, and strategic determinants of Japanese manufacturing investment in the United States. Strategic Management Journal. 15(6): 419-436.
• Hines, Jr. J. R. (1996) Altered States: Taxes and the location of foreign direct investment in America. The American Economic Review. 86(5): 1076-1094.
• Hirsch, B. and Macpherson, D. (2010). http://www.unionstats.com/Keller, W. and Levinson, A. (2002). Pollution abatement costs and foreign direct investment inflows to U.S. States. The Review of Economics and Statistics. 84(4): 691-703.
• National Science Foundation, Division of Science Resources Statistics, Science and Engineering Indicators (2010).
• United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2010.
• U.S. Census Bureau, Annual Survey of Manufactures: Geographic Area Statistics (various issues).
• U.S. Department of Commerce, Bureau of Economic Analysis (BEA).
• U.S. Department of Commerce, Annual Survey of State Government Finances (various issues).
• U.S. Department of Labor, Bureau of Labor Statistics.
• Wijeweera, A., Dollery, B. and Clark, D. (2007) Corporate tax rates and foreign direct investment in the United States. Applied Economics 39(1): 109-117