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Spatial effects of foreign direct investment in US states

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  • Eckhardt Bode
  • Peter Nunnenkamp
  • Andreas Waldkirch

Abstract

This paper estimates the aggregate productivity effects of Marshallian externalities generated by foreign direct investment (FDI) in US states, controlling for Marshallian externalities and other spatial spillovers generated by domestic firms. A regional production function framework models externalities and other spatial spillovers explicitly as determinants of total factor productivity. We employ a system generalized method of moments (GMM) estimator to account for the potential endogeneity of FDI and the presence of spatial lags. Using data for US states from 1977-2003, the results indicate that FDI generates positive externalities, while externalities from domestic firms are negative.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 45 (2012)
Issue (Month): 1 (February)
Pages: 16-40

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Handle: RePEc:cje:issued:v:45:y:2012:i:1:p:16-40

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Citations

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Cited by:
  1. Frank Bickenbach & Wan-Hsin Liu & Peter Nunnenkamp, 2013. "Regional Concentration of FDI in Post-reform India: A District-level Analysis," Kiel Working Papers 1854, Kiel Institute for the World Economy.
  2. Timo Mitze & Selin Özyurt, 2012. "The spatial dimension of trade- and FDI-driven productivity growth in Chinese provinces: A global cointegration approach," ERSA conference papers ersa12p512, European Regional Science Association.
  3. Pandej Chintrakarn & Dierk Herzer & Peter Nunnenkamp, 2010. "FDI and Income Inequality: Evidence from a Panel of US States," Kiel Working Papers 1579, Kiel Institute for the World Economy.
  4. Hasanat Shah, Syed & Li, Jun Jiang, 2013. "Does Chinese Investment Contribute to The US Economy? An Analysis of Selected US States’ Growth, Employment and Exports," MPRA Paper 52575, University Library of Munich, Germany.
  5. Laura Resmini & Laura Casi, 2013. "Spatial complexity and interactions in regions? FDI attractiveness," ERSA conference papers ersa13p1063, European Regional Science Association.

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