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Does Foreign Direct Investment Promote Regional Development in Developed Countries? A Markov Chain Approach for US States

  • Eckhardt Bode
  • Peter Nunnenkamp

This paper investigates the effects of inward FDI on per-capita income and growth of the US states since the mid-1970s. Using a Markov chain approach, it shows that both quantitative and qualitative characteristics of FDI affect per-capita income and growth. Employment-intensive FDI, concentrated in richer states, has been conducive to income growth, while capital-intensive FDI, concentrated in poorer states, has not. FDI has consequently tended to slow down rather than foster income convergence among US states. It appears to be less important whether FDI has been undertaken in the manufacturing sector of US states or in other sectors.

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File URL: https://www.ifw-members.ifw-kiel.de/publications/does-foreign-direct-investment-promote-regional-development-in-developed-countries-a-markov-chain-approach-for-us-states-1/kap1374.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1374.

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Length: 32 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:kie:kieliw:1374
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