state characteristics and the location of foreign direct investment within the united states a conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the united states is developed and estimated the authors results for 1981 83 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively more foreign direct investment in addition higher wages deterred foreign direct investment while higher unemployment rates attracted it surprisingly higher unionization rates were associated with increased foreign direct investment overall higher taxes deterred foreign direct investment however more extensive transportation infrastructures and larger promotional expenditures were associated with increased foreign direct investment copyright 1991 by mit press

networking off madison avenue known for the key role that networking plays in the operation of agencies where interviews suggest that informal networking among close neighbors is critical to many agencies success networking involves the exchange of ideas and while there is no market place for these ideas exchanges may be more deliberate rather than just marshall s 1890 mysteries of the air type of information spillovers this paper examines the effect on productivity of having more near advertising agency neighborhoods and hence better opportunities for meetings and exchange within manhattan we will show that there is extremely rapid spatial decay in the benefits of having more near neighbors even in the close quarters of southern manhattan a finding that is new to the empirical literature and indicates our understanding of scale externalities is still very limited the finding indicates that having a high density of commercial establishments is important in enhancing local productivity an issue in lucas and rossi hansberg 2002 where within business district spatial decay of spillovers plays a key role we will argue also that in manhattan advertising agencies trade off the higher rent costs of being in bigger clusters nearer centers of action against the lower rent costs of operating on the fringes away from high concentrations of other agencies introducing the idea of trade offs immediately suggests heterogeneity is involved we will show that higher quality agencies are the ones willing to pay more rent to locate in greater size clusters specifically because they benefit more from networking while all 1 the research in this paper was conducted while the authors were census bureau research associates at the boston research data center research results and conclusions expressed are those of the authors and do not necessarily indicate concurrence by the census bureau the paper has been screened to ensure that no confidential data are revealed we acknowledge helpful comments from andrew foster on aspects of the paper and from participants in seminars at brown university lse and the university of toronto

inter city competition for foreign investment static and dynamic effects of china s incentive areas abstract china s open door policy has created a natural experiment for studying agglomeration externalities and the role of incentives designed to attract foreign direct investment we build a model which predicts that foreign firms will prefer cities where other foreign firms are located we estimate the model using data on 931 foreign ventures we then use simulations to explore the effect policies favoring particular cities had on the distribution of investment we find that attractive cities those with good infrastructure and an established industrial base gained most and that agglomeration effects greatly magnified the direct impact of policy

agglomeration adjustment and state policies in the location of foreign direct investment in the united states abstract using u s state level data we show that agglomeration externalities influence the level of foreign invested capital in a location our empirical model allows the separation of agglomeration effects from the rate of capital stock adjustment two forces that previous research has conflated we estimate an agglomeration elasticity of investment of 0 11 to 0 15 with respect to same source country investment lower than previous estimates we also investigate the influence of state policies and find that although general investment incentives do not affect the location of fdi targeted policies such as unitary taxation and state foreign offices influence investment

how does globalisation affect regional inequality within a developing country evidence from china developing countries are increasingly concerned about effects of globalisation on regional inequality this paper develops an empirical method for decomposing the contributions of two major driving forces of globalisation foreign trade and foreign direct investment fdi on regional inequality and applies it to china even after controlling for many other factors globalisation is still found to be an important factor contributing to the widening regional inequality the paper ends by investigating the role of factor market segmentations in aggravating the distributional effect of changing regional comparative advantages in the process of globalisation

how responsive is business capital formation to its user cost an exploration with micro data abstract the response of business capital formation to its user cost is critical to evaluating tax reform deficit reduction and monetary policy evidence for a substantial user cost elasticity however is sparse most evidence has been based on aggregate data although several recent studies with firm level data report substantial effects with a particularly rich micro dataset containing over 26 000 observations this paper explores what can be learned about the user cost elasticity while the results depend to some extent on the specification and econometric technique various diagnostics lead us to prefer a precisely estimated but small elasticity of approximately 0 25 this paper is dedicated to the memory of robert eisner who labored early and ably on uncovering the determinants of investment spending and highlighting the importance of the question found in the title of this paper

spatial econometric analysis of foreign direct investment determinants in russian regions using a spatial autoregressive model of cross sectional and panel data we study the determinants and dominant strategies of foreign direct investment fdi inflows into russia before and after the 1998 financial crisis the important determinants of fdi inflows into russian regions since the start of transition appear to be market size the presence of large cities and sea ports oil and gas availability proximity to european market and political and legislative risks since 1998 it appears the importance of big cities the sakhalin region oil and gas resources proximity to european markets and legislation and political risks has increased our results also reveal a shift from horizontal fdi strategy to vertical fdi strategy in the post crisis period using a multiple spatial lags approach we show that neighbouring port endowed regions tend to have emerged in the post crisis era as competitors for fdi

economic research evolves fields and styles we examine the evolution of economics research using a machine learning based classification of publications into fields and styles the changing field distribution of publications would not seem to favor empirical papers but economics empirical shift is a within field phenomenon even fields that traditionally emphasize theory have gotten more empirical empirical work has also come to be more cited than theoretical work the citation shift is sharpened when citations are weighted by journal importance regression analyses of citations per paper show empirical publications reaching citation parity with theoretical publications around 2000 within fields and journals however empirical work is now cited more

economic reforms fdi and economic growth in india a sector level analysis summary booming foreign direct investment fdi in post reform india is widely believed to promote economic growth we assess this proposition by subjecting industry specific fdi and output data to granger causality tests within a panel cointegration framework it turns out that the growth effects of fdi vary widely across sectors fdi stocks and output are mutually reinforcing in the manufacturing sector whereas any causal relationship is absent in the primary sector most strikingly we find only transitory effects of fdi on output in the services sector however fdi in the services sector appears to have promoted growth in the manufacturing sector through cross sector spillovers

the credibility revolution in empirical economics how better research design is taking the con out of econometrics since edward leamer s memorable 1983 paper let s take the con out of econometrics empirical microeconomics has experienced a credibility revolution while leamer s suggested remedy sensitivity analysis has played a role in this we argue that the primary engine driving improvement has been a focus on the quality of empirical research designs the advantages of a good research design are perhaps most easily apparent in research using random assignment we begin with an overview of leamer s 1983 critique and his proposed remedies we then turn to the key factors we see contributing to improved empirical work including the availability of more and better data along with advances in theoretical econometric understanding but especially the fact that research design has moved front and center in much of empirical micro we offer a brief digression into macroeconomics and industrial organization where progress by our lights is less dramatic although there is work in both fields that we find encouraging finally we discuss the view that the design pendulum has swung too far critics of design driven studies argue that in pursuit of clean and credible research designs researchers seek good answers instead of good questions we briefly respond to this concern which worries us little

cash flow investment and keynes minsky cycles this paper analyzes a dynamic model with 1 an investment function that emphasizes cash flow 2 a keynesian macroeconomic framework that determines cash flow endogenously 3 a dynamic labor market model that drives wage and price adjustments and 4 boundedly rational expectations simulations from the calibrated model generate endogenous cycles with characteristics described in hyman minsky s research the cycle arises from the link between investment interest rates debt service and cash flow the amplitude and frequency of the cycle are related to the importance of cash flow for investment the dynamics of inflation and the distribution of income

investment confidence corporate debt and income fluctuations in this paper we present a macroeconomic model with new keynesian features which endogenously generates dynamic paths of income and the stock of corporate debt of a cyclic and chaotic nature from the market clearing condition on goods and money markets we derive the dynamic paths of income and corporate debt whose stability properties depend upon the propensity to invest out of the flow of internally generated funds which in turn is a positive function of income if it is relatively low the dynamic paths on income and corporate debt converge to their steady state long run values when the propensity to invest is neither too low nor too high the system can exhibit either bounded cycles or chaotic dynamics finally if it exceeds a critical upper value an explosive growth of debt occurs and a financial crisis is likely to ensue

knowledge seeking and location choice of foreign direct investment in the united states to what extent do firms go abroad to access technology available in other locations this paper examines whether and when state technical capabilities attract foreign investment in manufacturing from 1987 1993 we find that on average state r d intensity does not attract foreign direct investment most investing firms are in lower tech industries and locate in low r d intensity states suggesting little interest in state technical capabilities in contrast we find that firms in research intensive industries are more likely to locate in states with high r d intensity foreign firms in the pharmaceutical industry value state r d intensity the most at a level twice that of firms in the semiconductor industry and four times that of electronics firms interestingly not only firms from technically lagging nations but also some firms from technically leading nations are attracted to r d intensive states this suggests that beyond catching up firms use knowledge seeking investments also to source technical diversity

industrial location in post reform india patterns of inter regional divergence and intra regional convergence where do new industrial investments locate and what factors drive the industrial location decisions do these investments follow the model of divergence followed by convergence suggested by the cumulative causation agglomeration economies and transport costs approaches these questions are examined with district level data from india for the pre and post reform periods using first tables and maps of concentration and clustering aggregated for all industry and disaggregated into five sectors heavy industries chemicals and petroleum textiles agribusiness and utilities and second logistic and ols heckman selection regression models for these six elements the data provide solid evidence both of inter regional divergence and intra regional convergence and suggest that concentrated decentralisation is the appropriate framework for understanding industrial location in post reform india

do agglomeration economies reduce the sensitivity of firm location to tax differentials recent theoretical work in economic geography has shown that agglomeration forces can mitigate race to the bottom tax competition by partly or fully offsetting firms sensitivity to tax differentials we test this proposition using data on firm births across swiss municipalities we find that corporate taxes deter firm births less in more spatially concentrated sectors firms in sectors with an agglomeration intensity in the top quintile are less than half as responsive to differences in corporate tax burdens as firms in sectors with an agglomeration intensity in the bottom quintile hence agglomeration economies do appear to attenuate the impact of tax differentials on firms location choices

fdi in space spatial autoregressive relationships in foreign direct investment abstract there are a number of theoretical reasons why foreign direct investment fdi into a host country may depend on the fdi in proximate countries such spatial interdependence has been largely ignored by the empirical fdi literature with only a couple recent papers accounting for such issues in their estimation this paper conducts a general examination of spatial interactions in empirical fdi models using data on us outbound fdi activity we find that estimated relationships of traditional determinants of fdi are surprisingly robust to inclusion of terms to capture spatial interdependence even though such interdependence is estimated to be significant however we find that both the traditional determinants of fdi and the estimated spatial interdependence are quite sensitive to the sample of countries one examines

the location choices of foreign investors a district level analysis in india this paper analyzes the determinants of the location choices made by foreign investors at the district level in india to gauge the relative importance of economic geography factors local business conditions and the presence of previous foreign investors we employ a discretechoice model and poisson regressions to control for the potential violation of the assumption of independence of irrelevant alternatives our sample includes about 19 500 foreign investment projects approved in 447 districts from 1991 2005 we find that foreign investors strongly prefer locations where other foreign investors are they are also attracted to industrially diverse locations and those with better infrastructure we conclude that the concentration of fdi in a few locations could fuel regional divergence in post reform india

foreign direct investment in china a spatial econometric study foreign direct investment fdi began to flow into china with advent of reforms in 1978 following a period of relatively slow growth fdi inflows to china picked up after 1990 as china surpassed every other nation but the united states in attracting foreign investment in particular coastal regions of china have received the bulk of fdi inflows to the country in this paper we use province level data to explain the pattern of fdi location across china we build upon previous research introducing new potential determinants using more recent fdi data and incorporating spatial econometric techniques in doing so we test for potential econometric problems arising from the spatial pattern of the data and correct for them by running more appropriate models we find that economic size labor productivity and coastal location attract fdi while higher wages and illiteracy rates deter it the transportation infrastructure variables we try are not found to have statistically significant relationships with the level of fdi inflows across provinces this abstract was borrowed from another version of this item

firm location decisions regional grants and agglomeration externalities we examine whether discretionary government grants influence where domestic and multinational firms locate new plants and how the presence of agglomeration externalities interacts with these policy instruments we find that a region s existing industrial structure has an effect on the location of new entrants grants do have a small effect in attracting plants to specific geographic areas but importantly we find that firms are less responsive to government subsidies in areas where there are fewer existing plants in their industry this suggests that these subsidies are less effective in influencing firms location decisions in the face of countervailing co location benefits