Does foreign direct investment promote regional development in developed countries? A Markov chain approach for US states

Abstract

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Fdi and Income Inequality: Evidence From a Panel of U.S. States

“…4. The average per-capita income in the richest U.S. states was about twice as high as in the poorest U.S. states (see also Bode and Nunnenkamp 2011). states (0.18 in 2001). The ten poorest U.S. states hosted just 13% of total inward FDI stocks.…”

“…One possible reason could be that FDI is not a major source of technological innovation in the United States, as Figini and Görg (1999) suspect. The cross‐country analysis of Figini and Görg (2006, 12) appears to be in line with this reasoning: when splitting their sample into developed and developing host countries, the effect of FDI on inequality turns out to be negative for the former subsample, possibly because “developed countries are already at high levels of technological development.” Similarly, Mullen and Williams (2005) as well as Bode and Nunnenkamp (2011) argue that affiliates of foreign‐based MNEs operating in the technologically most advanced United States may be at the receiving end of technological and knowledge spillovers.…”

“…4 4 The average per‐capita income in the richest U.S. states was about twice as high as in the poorest U.S. states (see also Bode and Nunnenkamp 2011). …”

Factors Affecting Inward FDI Employment in the U.S. Economy: An Empirical Evidence

“…Bode and Nunnenkamp (2007) investigated the effects of inward FDI on per-capita income and growth of the US states since the mid-1970s. This study analyzed the long-run relationships between inward FDI and economic outcomes in terms of value added and employment at the level of US states (Bode & Nunnenkamp, 2007). The study found that employment-intensive FDI, concentrated in richer states, has been conducive to income growth, while capital-intensive FDI, concentrated in poorer states, has not.…”

Spatial effects of foreign direct investment in US states

“…Ajaga and Nunnenkamp (2008) find two‐way causality between FDI and economic outcomes. Bode and Nunnenkamp (2011) employ a Markov chain approach to show that (i) both quantitative and qualitative FDI characteristics affect per capita income growth, and (ii) FDI has tended to slow down income convergence among US states. According to Ford, Rork, and Elmslie (2008), US states have to be well endowed with human capital to derive benefits from FDI, similar to Borensztein, DeGregorio, and Lee’s (1998) findings across developing host countries 4 .…”