U.S. Bureau of Economic Analysis data show that the nation’s rate of yearly output growth between 1995 and 1999 was more than 50% higher than for the period 1987 to 1994. Using state-level data, this study examines foreign capital’s contribution to this upturn in growth. Pooling data for the 50 states in a regression framework showed that foreign capital accounted for 2.6% of overall state output growth for the full period. Foreign capital made no contribution between 1987 and 1994 but accounted for 3.7% of output growth between 1995 and 1999. Furthermore, estimates show that foreign capital had a much larger impact on the manufacturing sector, accounting for more than 16.7% of state manufacturing output growth between 1995 and 1999.
Amuedo-Dorantes, C.,& Pozo, S. (2001). Foreign exchange rates and foreign direct investment in the United States. International Trade Journal, 15(3), 323-343.
2.
Arend, M. (2000, November). US economic vitality sparks surge in direct investment flows. Site Selection Magazine, pp. 37-41.
3.
Arpan, J. S., Flowers, E. B.,& Ricks, D. A. (1981). Foreign direct investment in the US: The state of knowledge in research. Journal of International Business Studies, 12(1), 137-154.
4.
Balcao Reis, A. (2001). Onthe welfare effects of foreign investment. Journal of International Economics, 54(2), 411-427.
5.
Bhargava, A., Franzini, L.,& Narendranathan, W. (1992). Serial correlation and the fixed effects model. Reviewof Economics and Statistics, 49(158), 533-549.
6.
Buss, T. F. (2001). The effect of state tax incentives on economic growth and firm location decisions: An overviewof the literature. Economic Development Quarterly, 15(1), 90-105.
7.
Chamarbagwala, R., Ramaswamy, S.,& Wunnava, P. V. (2000). The role of foreign capital in domestic manufacturing productivity: Empirical evidence from Asian economies. Applied Economics, 32, 393-398.
8.
Coughlin, C. C., Terza, J. V., & Arromdee, V. (1991). State characteristics and the location of foreign direct investment within the United States. The Review of Economics and Statistics, 73(4), 675-683.
9.
Crain, M. W., & Lee, K. J. (1999). Economic growth regressions for the American states: A sensitivity analysis. Economic Inquiry, 37(2), 242-257.
10.
Fisher, P. S.,& Peters, A. H. (1998). Industrial incentives: Competition among American states and cities. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.
11.
Florida, R.,& Kenney, M. (1994). The globalization of Japanese R&D: The economic geography of Japanese R&D investment in the United States. Economic Geography, 70(4), 344-369.
12.
Goss, E. P. (2001). The Internet’s contribution to US productivity growth. Business Economics, 36, 32-42.
13.
Goss, E. P., & Phillips, J. M. (2001). The impact of tax incentives: Do initial economic conditions matter?Growth & Change, 32, 236-250.
14.
Graham, E. M., & Krugman, P. R. (1995). Foreign direct investment in the United States. Washington, DC: Institute for International Economics.
15.
Hausman, J. A., & Taylor, W. E. (1981). Panel data and unobservable individual effects. Econometricia, 49, 1377-1398.
16.
Hines, J. R, Jr. (1996). Altered states: Taxes and the location of foreign direct investment in America. The American Economic Review, 86(5), 1076-1094.
17.
Kolesar, A. (1990). Can state and local tax incentives and other contributions stimulate economic development?The Tax Lawyer, 44(1), 285-285.
18.
Krol, R. (1995). Public infrastructure and state economic development. Economic Development Quarterly, 9(4), 331-339.
19.
Lavine, D. (2001, February). An integrated economic development budget: Putting apples and oranges in the same basket. Texas Business Review, pp. 1-5.
20.
Leichenko, R. M., & Erickson, R. A. (1997). Foreign direct investment and state export performance. Journal of Regional Science, 37(2), 307-329.
21.
Lin, Y., Szenberg, M., & Webster, T. J. (2001). Determinants of foreign direct investment: Taiwan, 1965-1993. Journal of Applied Business Research, 17(2), 51-63.
22.
Liou, K. (1993). Foreign direct investment in the United States: Trends, motives, and the state experience. American Review of Public Administration, 23(1), 1-17.
23.
Love, J. H.,& Lage-Hidalgo, F. (2000). Analyzing the determinants of U.S. direct investment in Mexico. Applied Economics, 32(10), 1259-1267.
24.
Lyne, J. (1999, September). Siegelman helps Honda’s star fall on Alabama. Site Selection Magazine, pp. 2-4.
25.
Lyne, J. (2001, August 27). Incentives help Michigan land French firm’s North American plant. Site Selection Magazine. Retrieved from www.siteselection.com
26.
Meredith, L. N., & Maki, D. R. (1992). The United States export and foreign direct investment linkage in Canadian manufacturing industries. Journal of Business Research, 24, 73-88.
27.
Munnell, A. H. (1990, September/October). How does public infrastructure affect regional economic performance?New England Economic Review, pp. 11-30.
28.
Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. The Review of Economics and Statistics, 83(4), 727-731.
29.
Reese, L. A.,& Fasenfest,. D. (1997). Values and the evaluation of local economic development policy. Economic Development Quarterly, 11(3), 195-207.
30.
Robinson-Barnes, C. J. (2000). The logic and pathologies of local and regional economic development strategies. International Journal of Public Administration, 23(9), 1573-1597.
31.
Rohatyn, F. (2000). America’s economic dependence. Foreign Affairs, 68(1), 53-65.
32.
Rondinelli, D. A.,& Burpitt, W. J. (2000). Do government incentives attract and retain international investment? Astudy of foreign-owned firms in North Carolina. Policy Sciences, 33(2), 181-205.
33.
Shaver, J. M. (1998). Do foreign-owned and U.S.-owned establishments exhibit the same location pattern in U.S. manufacturing industries?Journal of International Business Studies, 29(3), 469-492.
34.
Shelburne, R. C., & Bednarzik, R. W. (1993). Geographic concentration of trade-sensitive employment. Monthly Labor Review, 116(6), 3-13.
35.
Single, L. E. (1999). Tax holidays and firms’ subsidiary location decisions. The Journal of the American Taxation Association, 21(2), 17-34.
36.
Starner, R. (2001, July). Building a bio-hub in the Quaker state. Site Selection Magazine. Retrieved from www.siteselection.com
37.
Swenson, D. L. (1994). The impact of U.S. tax reform on foreign direct investment in the United States. Journal of Public Economics, 54(2), 243-266.
38.
U.S. Bureau of Economic Analysis. (1987-1999). Foreign direct investment in the United States: Operations of U.S. affiliates of foreign companies. Washington, DC: Author.
39.
Weitzman, M. (1979). Technology transfer to the USSR: An econometric analysis. Journal of Comparative Economics, 3, 167-177.
40.
Westlund, R. (2000, July). Skilled, available workers top pharmaceutical site seekers’ wish list. Site Selection Magazine. Retrieved from www.siteselection.com
41.
Zhang, W. (2001). Rethinking regional disparity in China. Economics of Planning, 34(1-2), 113-138.
