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The Effects of Foreign Direct Investment on Local Communities

In: Foreign Direct Investment

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  • David N. Figlio
  • Bruce A. Blonigen

Abstract

Little evidence exists on the effects of foreign direct investment (FDI) on local communities in the United States, despite evidence that U.S. communities actively bid against each other for FDI. We use detailed county-level panel data from South Carolina across 5-year intervals from 1980 through 1995 to investigate the effect of foreign manufacturing plants on local labor markets and on the level and distribution of local government budgets. We find that foreign investment raises local real wages much more than does domestic investment, but lowers per capita county-government expenditures and redistributes monies away from public school expenditures.

Suggested Citation

  • David N. Figlio & Bruce A. Blonigen, 2019. "The Effects of Foreign Direct Investment on Local Communities," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 11, pages 369-400, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813277014_0011
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    More about this item

    Keywords

    Foreign Direct Investment; Multinational Enterprises; Mergers and Acquisitions; Greenfield; Trade Policy; Taxation; Spillovers; Offshoring; Wage Inequality; Firm-Specific Assets; Antidumping; Tariff-jumping; Industrial Organization; Ownership-Location-Internalization Theory;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F6 - International Economics - - Economic Impacts of Globalization

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