Location determinants of new foreign-owned manufacturing plants
AbstractManufacturing employment in the United States has tended to fall since 1979. Geographically, the Northeast and Mideast regions have incurred the brunt of this decline and, except in the Southwest region, urban countries have tended to fare worse than rural countries. Meanwhile, foreign-owned manufacturing has been playing a larger role in the U.S. economy, especially in the Great Lakes and Southeast regions. The current research explains the pattern-among regions as well as between rural and urban countries-of new foreign plant location. Proxies measuring economic size, labor force quality, agglomeration and urbanization economies, and transportation infrastructure are found to affect the location of new foreign-owned plants positively, while proxies for unit labor costs and taxes are found to deter the location of new plants. The key advantages of the Great Lakes region stem from relatively low unit labor costs and high manufacturing density, while high manufacturing density and low taxes are the key advantages of the Southeast region. Comparing urban with rural countries, nearly all the explanatory variables possess average values for urban countries that are more favorable to foreign direct investment. For example, the labor force is relatively more productive and skilled in urban than in rural countries.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 1997-018.
Date of creation: 1997
Date of revision:
Publication status: Published in Journal of Regional Science, May 2000, 40(2), pp. 323-51
Other versions of this item:
- Cletus C. Coughlin & Eran Segev, 2000. "Location Determinants of New Foreign-Owned Manufacturing Plants," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 323-351.
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