Factors Affecting Inward FDI Employment in the U.S. Economy: An Empirical Evidence

Abstract

This research paper centers on factors affecting inward foreign direct investment (FDI) employment in the U.S. economy. The introductory part of this paper focuses on an economic analyzes of inward FDI flow and employment, by industry and states. The empirical part of this research investigates state-based factors affecting the inward FDI employment among 50 states of the United States. This study uses annual data for the period of time from 1997 to 2007 and identifies several state-specific determinants of FDI employment. The results indicate that the major factors exerting positive impact on inward US FDI employment are: real wages, infrastructure, unionization level, educational attainment, FDI stock, and manufacturing density. In addition, the results show that gross state product growth rate and real per capita taxes have negative impact on FDI employment. Surprisingly, the share of scientists and engineers in the workforce has an unexpected negative sign. Our findings indicate the importance of selected variables in evaluating the effects of FDI flow on state employment.