Foreign Direct Investment and State Export Performance

Abstract

Since the early 1980s, there has been widespread debate over the impacts of rising levels of inward foreign direct investment (FDI) on the U.S. economy. A frequently noted, but little studied, issue within the debate is the impact of FDI on U.S. foreign trade, and particularly, on the foreign trade of U S . regions. This study assesses the effects of FDI on the manufacturing export performance of U.S. states during the period from 1980 to 1991. Results indicate that increased levels of FDI are positively related to future improvements in state manufacturing export performance.

Dynamic Causal Relationships among GDP, Exports, and Foreign Direct Investment (FDI) in the Developing Countries

“…The threat posed by these foreign-owned plants may also stimulate competitor companies to invest in new technologies and implement new management practices because of fears of losing domestic market share to the more rapidly innovating and more efficient plants of foreign ownership. As a consequence of this interfirm competition, greater industry-wide competitiveness is achieved with a resultant ability to sell in foreign markets that could not previously be penetrated (Leichenko and Erickson (1997)). In contrast, exports may increase FDI by paving the way for FDI by reducing the investors' transaction costs though the knowledge of host country's market structure (Hsiao and Hsiao (2006)).…”

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

“…12 In addition, Feliciano and Lipsey (1999) use state and industry-wise FDI data to assess whether foreign-owned subsidiaries pay higher wages than US firms, which they find to be the case, though not in manufacturing. Leichenko and Erickson (1997) find that FDI was positively associated with US states' export performance in 1980-1991. In concluding, these authors note that it would be interesting to know whether favorable export effects translated into higher regional economic growth and, particularly, into growth in employment.…”

“…FDI stocks are normalized by the gross state product (GSP) to make the indicator independent of the absolute sizes of the states. The density of FDI stocks is the FDI indicator used most frequently in the literature (e.g., Leichenko and Erickson 1997;Bobonis and Shatz 2007 In addition to the quantitative measures of FDI density, qualitative or structural characteristics of FDI may impact significantly on its growth effects. Ideally, the quality of FDI would be captured by the degree to which FDI-related productivity effects spill over to local companies.…”

How do Indian Multinationals Affect Exports from Home Country?

“…al. (2002), Liu and Shu (2003) on China; Ramstetter (1999a b) on Hong Kong, Indonesia, Malaysia, Singapore, and Taiwan; Lutz and Talavera (2004) on Ukraine; Jensen (2002) on Poland; Leichenko and Erickson (1997) on the U.S. States indicate a strong role of FDI in the host country export performance. Thus the foreign ownership dummy, FDUM, is predicted to have a positive impact on the export performance of Indian enterprises.…”