Location determinants of new foreign-owned manufacturing plants
Manufacturing 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.
|Date of creation:||1997|
|Publication status:||Published in Journal of Regional Science, May 2000, 40(2), pp. 323-51|
|Contact details of provider:|| Postal: P.O. Box 442, St. Louis, MO 63166|
Web page: http://www.stlouisfed.org/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Head, Keith & Ries, John & Swenson, Deborah, 1995.
"Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States,"
Journal of International Economics,
Elsevier, vol. 38(3-4), pages 223-247, May.
- 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.
- Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-1094, December.
- James R. Hines Jr., 1993. "Altered States: Taxes and the Location of Foreign Direct Investment in America," NBER Working Papers 4397, National Bureau of Economic Research, Inc.
- Kozlowski, Paul J. & Weekly, James K., 1990. "Explaining Interstate Variations in Foreign Direct Investment in the United States," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 20(2).
- Kravis, Irving B. & Lipsey, Robert E., 1982. "The location of overseas production and production for export by U.S. multinational firms," Journal of International Economics, Elsevier, vol. 12(3-4), pages 201-223, May.
- Irving B. Kravis & Robert E. Lipsey, 1980. "The Location of Overseas Production and Production for Export by U.S. Multinational Firms," NBER Working Papers 0482, National Bureau of Economic Research, Inc.
- Smith Jr. , Donald F. & Florida Richard, 1994. "Agglomeration and Industrial Location: An Econometric Analysis of Japanese-Affiliated Manufacturing Establishments in Automotive-Related Industries," Journal of Urban Economics, Elsevier, vol. 36(1), pages 23-41, July.
- 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).
- J. Hatzius, 1997. "Foreign direct investment," LSE Research Online Documents on Economics 20351, London School of Economics and Political Science, LSE Library.
- Keith Head & John C. Ries & Deborah L. Swenson, 1994. "The Attraction of Foreign Manufacturing Investments: Investment Promotion and Agglomeration Economies," NBER Working Papers 4878, National Bureau of Economic Research, Inc.
- Cameron, A Colin & Trivedi, Pravin K, 1986. "Econometric Models Based on Count Data: Comparisons and Applications of Some Estimators and Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 29-53, January.
- Gerald A. Carlino & Richard Voith & Brian J. Cody, 1991. "The effects of exchange rate and productivity changes on U.S. industrial output at the state level," Working Papers 91-16, Federal Reserve Bank of Philadelphia.
- Thomas H. Klier, 1995. "The geography of lean manufacturing: recent evidence from the U.S. auto industry," Economic Perspectives, Federal Reserve Bank of Chicago, issue Nov, pages 2-16.
- Dewenter, Kathryn L, 1995. "Do Exchange Rate Changes Drive Foreign Direct Investment?," The Journal of Business, University of Chicago Press, vol. 68(3), pages 405-433, July.
- Gerald Carlino & Richard Voith & Brian Cody, 1994. "The Effects of Exchange Rate and Relative Productivity Changes on US Industrial Output at the State Level," Urban Studies, Urban Studies Journal Limited, vol. 31(2), pages 219-232, March. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:fip:fedlwp:1997-018. 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: (Anna Xiao)
If references are entirely missing, you can add them using this form.