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Regional foreign direct investment potential of the states within the US

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  • Kandogan, Yener

Abstract

Given various significant benefits, not only countries but also regions within a country compete against each other in trying to attract foreign direct investments (FDI). While there are several studies explaining the factors behind a country's potential for foreign direct investment, within-country location choice of multinationals has not been as adequately studied. After a brief review of the literature on location decisions of multinationals, this study attempts to fill this gap by identifying the factors that lead to variations in the attractiveness of regions within a country. The study uses states within the US as regions and develops an FDI potential index for the states using the results. The analysis is carried out not only to explain the amount of capital investment by multinationals to a specific region but also the level of employment resulting from the FDI, which seems to be the main reason for state legislatures’ efforts to attract such investments in the US. The index provides a guideline for identifying the successful strategies in states’ promotional economic development programs.

Suggested Citation

  • Kandogan, Yener, 2012. "Regional foreign direct investment potential of the states within the US," Journal of Economics and Business, Elsevier, vol. 64(4), pages 306-322.
    • Handle: RePEc:eee:jebusi:v:64:y:2012:i:4:p:306-322
    DOI: 10.1016/j.jeconbus.2012.03.004
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    More about this item

    Keywords

    Multiple regression analysis; Theory of FDI and the MNE; Economic geography;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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