State Characteristics and the Location of Foreign Direct Investment within the United States

A conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the United States is developed and estimated. Our results for 1981-1983 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively...

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Bibliographic Details
Published in:The review of economics and statistics 1991-11, Vol.73 (4), p.675-683
Main Authors: Coughlin, Cletus C., Terza, Joseph V., Arromdee, Vachira
Format: Article
Language:English
Subjects:
Comparative studies
Decision-making
Economic models
Economic theory
Effects
Employment
Foreign direct investments
Foreign investment
Foreign investments
Foreign investments in the US
Industrial development
Industrial policy
Industry
Investors
Location
Logarithms
Manufacturing
Personal income taxes
Regionalism
Regression analysis
States
Statistical significance
Taxation
Unemployment
Unemployment rates
United States
Variables
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Summary:A conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the United States is developed and estimated. Our results for 1981-1983 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively more foreign direct investment. In addition, higher wages deterred foreign direct investment, while higher unemployment rates attracted it. Surprisingly, higher unionization rates were associated with increased foreign direct investment. Overall, higher taxes deterred foreign direct investment; however, more extensive transportation infrastructures and larger promotional expenditures were associated with increased foreign direct investment.
ISSN:0034-6535
1530-9142
DOI:10.2307/2109406