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Do All Foreign Direct Investment Inflows Benefit the Local Economy?

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  • Kostas Axarloglou
  • Mike Pournarakis

Abstract

The present study measures the impact of FDI inflows on the local economies of the US states that receive most of the FDI inflows in the country. It appears that FDI inflows in manufacturing have rather weak effects on local employment and wages in most of the states in the sample. However, these results are primarily due to the industry composition of the FDI. FDI inflows in Printing and Publishing, Transportation Equipment and Instruments have positive effects on local employment and wages, while FDI inflows in Leather and Stone/Clay/Glass have detrimental effects on local labour markets in most of the states in the sample. These findings indicate the importance of industry characteristics in evaluating the effects of FDI inflows on local communities. Also, they emphasise the need for US states to selectively target and attract FDI inflows in specific industries.

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  • Kostas Axarloglou & Mike Pournarakis, 2007. "Do All Foreign Direct Investment Inflows Benefit the Local Economy?," The World Economy, Wiley Blackwell, vol. 30(3), pages 424-445, March.
    • Handle: RePEc:bla:worlde:v:30:y:2007:i:3:p:424-445
    DOI: 10.1111/j.1467-9701.2006.00824.x
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    11. Adam P. Balcerzak & Miroslawa Zurek, 2011. "Foreign Direct Investment and Unemployment: VAR Analysis for Poland in the Years 1995-2009," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 3-14.
    12. KIYOTA Kozo & NAKAJIMA Kentaro & TAKIZAWA Miho, 2022. "Local Labor Market Effects of Chinese Imports and Offshoring: Evidence from Matched-Foreign Affiliate-Domestic Parent-Domestic Plant Data in Japan," Discussion papers 22013, Research Institute of Economy, Trade and Industry (RIETI).
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    14. Najeeb Muhammad Nasir & Mohammed Ziaur Rehman & Nasir Ali, 2017. "Foreign Direct Investment, Financial Development and Economic Growth," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 8(4), pages 228-239, October.
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    16. Kurtović, Safet & Maxhuni, Nehat & Halili, Blerim & Krasniqi, Bujar, 2021. "The Asymmetric Effect of Foreign Direct Investment on the Net Average Wages of Southeastern European Countries," MPRA Paper 107924, University Library of Munich, Germany, revised 18 Apr 2021.
    17. Fabienne Fortanier & Selwyn Moons, 2011. "Foreign Investors in The Netherlands: Heterogeneous Employment and Productivity Effects," De Economist, Springer, vol. 159(4), pages 511-531, December.
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