Advanced Search
MyIDEAS: Login to save this article or follow this journal

Employment by foreign firms in the U.S.: Do state incentives matter?

Contents:

Author Info

  • Rogers, Cynthia L.
  • Wu, Chen

Abstract

This study investigates the relationship between state-level attributes and employment of workers in the US by foreign owned firms (FDI-related employment, hereafter). In particular, we investigate the role of state-level business incentives in influencing the employment outcomes of foreign-owned manufacturing firms operating in the US. Using data from 50 states between 1999 and 2008, we employ a two-way fixed effects panel data framework and a dynamic system GMM approach to account for the dynamic features of employment outcomes. We also correct for potential measurement errors and potential endogeneity of policy variables. Our results suggest that state business incentives such as providing more foreign-trade zones (both general-purpose and subzones), the provision of better public services and establishing overseas offices in particular countries, have statistically significant effects on employment by foreign-owned firms in the US. The implications have direct bearing regarding the strategic use of investment-promotion policies in terms of employment effects.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0166046212000348
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 42 (2012)
Issue (Month): 4 ()
Pages: 664-680

as in new window
Handle: RePEc:eee:regeco:v:42:y:2012:i:4:p:664-680

Contact details of provider:
Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: State business-promotion policies; U.S. employment; Foreign direct investment; Agglomeration; Dynamic system GMM;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Timothy C. Ford & Jonathan C. Rork & Bruce T. Elmslie, 2008. "Foreign Direct Investment, Economic Growth, and the Human Capital Threshold: Evidence from US States," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 96-113, 02.
  2. Bruce A. Blonigen & Ronald B. Davies & Glen R. Waddell & Helen T. Naughton, 2004. "FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment," NBER Working Papers 10939, National Bureau of Economic Research, Inc.
  3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  4. Keith Head & Thierry Mayer, 2004. "Market Potential and the Location of Japanese Investment in the European Union," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 959-972, November.
  5. Hejazi, Walid, 2009. "Does China receive more regional FDI than gravity would suggest?," European Management Journal, Elsevier, vol. 27(5), pages 327-335, October.
  6. Kemegue, Francis & Mohan, Ramesh, 2007. "US FDI flows to ASEAN-5: Do Geographic Neighbors Matter?," MPRA Paper 5988, University Library of Munich, Germany.
  7. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
  8. Ivar Kolstad & Espen Villanger, 2004. "Determinants of foreign direct investment in services," CMI Working Papers WP 2004: 2, CMI (Chr. Michelsen Institute), Bergen, Norway.
  9. Ford, Timothy C. & Rork, Jonathan C., 2010. "Why buy what you can get for free? The effect of foreign direct investment on state patent rates," Journal of Urban Economics, Elsevier, vol. 68(1), pages 72-81, July.
  10. Gross, Dominique M. & Ryan, Michael, 2008. "FDI location and size: Does employment protection legislation matter?," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 590-605, November.
  11. Keith Head & John Ries & Deborah Swenson, 1994. "Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States," NBER Working Papers 4767, National Bureau of Economic Research, Inc.
  12. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
  13. Head, C. Keith & Ries, John C. & Swenson, Deborah L., 1999. "Attracting foreign manufacturing: Investment promotion and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 197-218, March.
  14. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  15. ANDRZEJ CIEŚLIK, 2005. "Location Of Foreign Firms And National Border Effects: The Case Of Poland," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 96(3), pages 287-297, 07.
  16. Bruce A. Blonigen & Ronald B. Davies, 2001. "The Effects of Bilateral Tax Treaties on U.S. FDI Activity," University of Oregon Economics Department Working Papers 2001-14, University of Oregon Economics Department, revised 01 Jan 2001.
  17. Fredriksson, Per G. & List, John A. & Millimet, Daniel L., 2003. "Bureaucratic corruption, environmental policy and inbound US FDI: theory and evidence," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1407-1430, August.
  18. Ahn, Seung C. & Schmidt, Peter, 1995. "Efficient estimation of models for dynamic panel data," Journal of Econometrics, Elsevier, vol. 68(1), pages 5-27, July.
  19. W. Robert Reed & Cynthia L. Rogers, 2005. "Tax Burden and the Mismeasurement of State Tax Policy," Public Economics 0505001, EconWPA.
  20. Barrios, Salvador & Bertinelli, Luisito & Strobl, Eric, 2006. "Coagglomeration and spillovers," Regional Science and Urban Economics, Elsevier, vol. 36(4), pages 467-481, July.
  21. Cletus C. Coughlin & Eran Segev, 1997. "Location determinants of new foreign-owned manufacturing plants," Working Papers 1997-018, Federal Reserve Bank of St. Louis.
  22. Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2004. "Foreign direct investment in a world of multiple taxes," Journal of Public Economics, Elsevier, vol. 88(12), pages 2727-2744, December.
  23. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
  24. Tuan, Chyau & Ng, Linda Fung-Yee, 2007. "The place of FDI in China's regional economic development: Emergence of the globalized delta economies," Journal of Asian Economics, Elsevier, vol. 18(2), pages 348-364, April.
  25. Josep-Maria Arauzo-Carod & Daniel Liviano-Solis & Miguel Manjón-Antolín, 2010. "Empirical Studies In Industrial Location: An Assessment Of Their Methods And Results," Journal of Regional Science, Wiley Blackwell, vol. 50(3), pages 685-711.
  26. Braconier, Henrik & Norback, Pehr-Johan & Urban, Dieter, 2005. "Multinational enterprises and wage costs: vertical FDI revisited," Journal of International Economics, Elsevier, vol. 67(2), pages 446-470, December.
  27. Cheng, Leonard K. & Kwan, Yum K., 2000. "What are the determinants of the location of foreign direct investment? The Chinese experience," Journal of International Economics, Elsevier, vol. 51(2), pages 379-400, August.
  28. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  29. List, John A., 2001. "US county-level determinants of inbound FDI: evidence from a two-step modified count data model," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 953-973, May.
  30. Girma, Sourafel & Gorg, Holger & Strobl, Eric, 2007. "The effects of government grants on plant survival: A micro-econometric analysis," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 701-720, August.
  31. Blonigen, Bruce A. & Ellis, Christopher J. & Fausten, Dietrich, 2005. "Industrial groupings and foreign direct investment," Journal of International Economics, Elsevier, vol. 65(1), pages 75-91, January.
  32. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
  33. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2007. "Estimating models of complex FDI: Are there third-country effects?," Journal of Econometrics, Elsevier, vol. 140(1), pages 260-281, September.
  34. Ng, Linda Fung-Yee & Tuan, Chyau, 2006. "Spatial agglomeration, FDI, and regional growth in China: Locality of local and foreign manufacturing investments," Journal of Asian Economics, Elsevier, vol. 17(4), pages 691-713, October.
  35. List, John A. & Co, Catherine Y., 2000. "The Effects of Environmental Regulations on Foreign Direct Investment," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 1-20, July.
  36. Todd M. Gabe & Kathleen P. Bell, 2004. "Tradeoffs between Local Taxes and Government Spending as Determinants of Business Location," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 21-41.
  37. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
  38. Sun, Qian & Tong, Wilson & Yu, Qiao, 2002. "Determinants of foreign direct investment across China," Journal of International Money and Finance, Elsevier, vol. 21(1), pages 79-113, February.
  39. Ng, Linda F. Y. & Tuan, Chyau, 2003. "Location decisions of manufacturing FDI in China: implications of China's WTO accession," Journal of Asian Economics, Elsevier, vol. 14(1), pages 51-72, February.
  40. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2007. "Firm location decisions, regional grants and agglomeration externalities," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 413-435, April.
  41. Du, Julan & Lu, Yi & Tao, Zhigang, 2008. "Economic institutions and FDI location choice: Evidence from US multinationals in China," Journal of Comparative Economics, Elsevier, vol. 36(3), pages 412-429, September.
  42. Kozlowski, Paul J. & Solocha, Andrew & Dixon, Lori, 1994. "Attracting Foreign Direct Investments to States: Outcomes, Budgets, and Foreign Offices," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 24(2).
  43. Virginia D. McConnell & Robert M. Schwab, 1990. "The Impact of Environmental Regulation on Industry Location Decisions: The Motor Vehicle Industry," Land Economics, University of Wisconsin Press, vol. 66(1), pages 67-81.
  44. List, John A. & McHone, W. Warren & Millimet, Daniel L., 2004. "Effects of environmental regulation on foreign and domestic plant births: is there a home field advantage?," Journal of Urban Economics, Elsevier, vol. 56(2), pages 303-326, September.
  45. Julan Du & Yi Lu & Zhigang Tao, 2008. "FDI location choice: agglomeration vs institutions," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 13(1), pages 92-107.
  46. Ge, Ying, 2009. "Globalization and Industry Agglomeration in China," World Development, Elsevier, vol. 37(3), pages 550-559, March.
  47. Tuan, Chyau & Ng, Linda F. Y., 2001. "Regional division of labor from agglomeration economies' perspective: some evidence," Journal of Asian Economics, Elsevier, vol. 12(1), pages 65-85.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:42:y:2012:i:4:p:664-680. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.