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Inward Foreign Direct Investment in the US: An Empirical Analysis of their Impact on State Economies

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  • Kostas Axarloglou

    (Department of International Economic Relations and Development, Democritus University of Thrace, University Campus, Komotini, Greece 69100.)

  • William L Casey

    (Economics Division, Babson College, Babson Park, MA 02457)

  • Hsiang-Ling Han

    (Economics Division, Babson College, Babson Park, MA 02457)

Abstract

In the present study, we analyze the effects of foreign direct investment (FDI) inflows in local economies across US states. Overall, FDI inflows have a positive and in several cases statistically significant impact on local employment and wages. However, these effects vary across US states. The study presents evidence supporting the idea that these results are due to the industry composition of FDI inflows across states. FDI inflows in Food, Lumber and Wood, Paper, Printing/Publishing, and Primary and Fabricated Metals have positive employment and wages effects, whereas FDI inflows in Petroleum and Instruments have negative effects.

Suggested Citation

  • Kostas Axarloglou & William L Casey & Hsiang-Ling Han, 2011. "Inward Foreign Direct Investment in the US: An Empirical Analysis of their Impact on State Economies," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(4), pages 508-529.
    • Handle: RePEc:pal:easeco:v:37:y:2011:i:4:p:508-529
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