Abstract
This article investigates the influence of tourism on foreign direct investment. Firms' foreign direct investment (FDI) decisions require detailed information about the host country's competitors, regulatory environment, work ethic, and culture. Incorporating tourism improves on existing research into FDI, which does not include measures for this complex information. Empirical analysis using a TOBIT methodology shows a positive and significant relationship between tourism and subsequent new foreign direct investment in the USA. Surprisingly, the analysis does not support expected industry-specific effects, which suggests that tourism associates with increased investment in capital-intensive as well as service industries.
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