The promotional roles of the state government and Japanese manufacturing direct investment in the United States

Abstract

Japanese direct investment in the United States has dramatically increased in the 1980s, particularly since 1985. Of all the Japanese direct investment in the United States, more than 60% occured in the second half of the decade. However, little is known about the roles that each of the 50 states plays in locating Japanese investment in the state. Anecdotes of the roles that some state governments play in attracting major Japanese investments are not sufficient to understand the effectiveness of various promotional measures. In this article, I examine the effectiveness of various promotional measures. An unexpected finding is reported: state government's export promotional activities are effective in attracting Japanese investments, while measures meant to attract them are not. Japanese firms have some preferred investment locations that seem weakly but positively influenced by the presence of peer Japanese firms preceding them.