CONCLUSION
Inward FDI represents an integral part of the US economy. Most of the foreign investment in the United States comes from the European developed economies. These investments are predominately in the manufacturing sector and accounts for very high percentage of foreign direct investment in the United States.
US affiliates of foreign companies in the manufacturing industry is the largest contributor of FDI employment in the US economy. In 2009, manufacturing employment accounted for 36.3 percent of total FDI employment in the United States. The next large industry outside the manufacturing for employment by US affiliates of foreign companies was retail trade. The retail trade industry accounted for 10.9% of total FDI employment followed by wholesale 9.7% along with finance and information consecutively accounting for 6.8% and 6.4% of total FDI employment. The leading states in foreign direct investment employment are California, Texas, Ohio, Pennsylvania, Illinois, North Carolina, New York, New Jersey. The southern US states have become more aggressive in recruiting foreign investment by providing incentives to attract investments.This paper investigates locational determinants of the inward foreign direct investment (FDI) among fifty states of the United States. In order to test the implications of our models, we collected a panel of aggregate data on foreign direct investment on all US states, excluding the District of Columbia. The entire data set includes 50 states for which foreign direct investment and all other relevant variables are reported over the 1997-2007 period. US policymakers obviously expect FDI inflows to help improve income and employment prospects in the economy.
It is known that foreign companies investing in the United States not only provide jobs, but offer relatively high-paying jobs what constitutes important factor influencing to high FDI employment and contributing to employment in the US economy.
Findings of our research show that real wages variable has the positive sign and it is statistically significant at 1% level. The next important factor the state highway mileage representing infrastructure is positively related to the FDI employment at the 1% level of significance. Among other findings, unionization variable, as expected is statistically significant at the 1% level of significance. It is known that the degree of unionization within US affiliates of foreign companies is relatively higher in comparison with domestic companies.The real stock ofFDI has a positive and statistically significant effect on FDI related employment. This could be due to the fact that the states with high level of FDI stocks also have larger related employment. The education has the expected positive sign and it is statistically significant at 1% level. It can be concluded, that for states to attract more investment is to spend more on educations and research and development activities. The real per capita taxes has the expected negative sign and it is statistically significant at 1% level. This finding is also consistent with the findings of previous studies. Given that the current results suggest that state government taxation negatively affect foreign direct investment, state governments may consider providing more fiscal incentives to foreign investors in order to attract more foreign direct invest to their states.
Real state growth rate has the unexpected negative sign and it is statistically significant at the 1% level It can be explained by the fact, that many foreign investors choose the southern part of the US as a desirable location for their FDI. The southern US states has become more aggressive in recruiting foreign investment by providing incentives to attract investments and communicating the unique advantages they offer to foreign companies. It could be related to the fact that that employment-intensive FDI, concentrated in richer states, has been conducive to growth, while capitalintensive FDI, concentrated in poorer states, has not. Additionally, according to Alfaro foreign direct investments in the primary sector tend to have a negative effect on growth and employment, while investments in manufacturing tend to have a positive one, while the evidence from the service sector is ambiguous (Alfaro, 2003). Surprisingly, the share of scientists and engineers in the workforce has an unexpected negative sign. It can be related to the fact that the labor force is relatively more productive and skilled in urban than in rural areas.