Inward Foreign Direct Investment: Employment and Location Issues

Abstract

Different studies have arrived at different conclusions as to whether foreigndirect investors in the United States prefer urban or rural locations. Location in “exurban”areas may explain this inconsistency. Using employment per square mile as a measure ofurbanization, this study uses 2002 data to investigate how employment in foreign-ownedfacilities varies across the states. Using OLS estimates, it is concluded that foreigninvestors prefer more urbanized states, possibly reflecting exurban preferences. However,the estimates also suggest that foreign investors prefer less-skilled labor (R12, F21, J23).