Abstract
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.
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