Size, Location and Agglomeration of Inward Foreign Direct Investment (FDI) in the United States

HALVORSEN T. Size, location and agglomeration of inward foreign direct investment (FDI) in the United States, Regional Studies. Since the late 1970s a range of economic development policies to attract foreign direct investments (FDIs) have been tried out. Despite a policy reorientation from a large-size bias to policies also favouring smaller investments, little empirical work has been performed on the determinants of investment size. This paper presents empirical evidence on how the size of FDIs is determined by agglomeration and other state-level factors. The results indicate that FDI agglomeration and urbanization affect investment size and that taxes, markets, labour, land and the concentration of scientific knowledge are important determinants in the size composition of FDI.