Metropolitan Statistical Area Location Choice by Foreign Direct Investors in the United States (PDF)
The importance of new foreign direct investment as a vehicle for the formation of productive capital has stimulated interest in understanding why multinational enterprises (MNEs) choose particular locations for their investments. Using data from greenfield investments reported on the BEA Survey of New Foreign Direct Investment in the United States, I analyze how locational characteristics influence the choice of where foreign MNEs establish their new investments in the United States. Identifying location choice at the MSA level allows me to analyze both traditional determinants of location choice such industrial agglomeration as well as measures of international connectivity that have been studied in research on global cities. My results support the finding that global cities are attractive to foreign direct investors in the United States not just by virtue of their population or industrial agglomeration, which serve to attract investment, but by virtue of a much wider set of attributes, related to their demography and connections to the wider world.
JEL Code(s) F23 Published