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The determinants of foreign direct investment: An analysis of US manufacturing industries
Author(s) -
Pugel Thomas A.
Publication year - 1981
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090020403
Subject(s) - foreign direct investment , competition (biology) , oligopoly , foreign portfolio investment , foreign capital , manufacturing , business , investment (military) , economics , industrial organization , international economics , production (economics) , open ended investment company , return on investment , microeconomics , cournot competition , macroeconomics , marketing , ecology , politics , political science , law , biology
This study explores the determinants of foreign direct investment by analyzing the variation across US manufacturing industries in the extent of outward foreign direct investment. Three types of industry characteristics are hypothesized to explain this variation. Empirical support is found for four sources of ownership‐specific advantages favoring foreign direct investment, new technology created through research and development, marketing abilities, organizational techniques and capital cost advantages. Support is found for the role of production scale economies in favoring centralization and hindering foreign direct investment, but results suggest only a weak role for transport costs in favoring decentralization and foreign direct investment. Producer concentration, perhaps reflecting oligopolistic competition, is positively related to foreign direct investment.