DETERMINANTS OF FOREIGN FIRM LOCATION DECISIONS IN THE UNITED-STATES,1985-1990 - IMPLICATIONS FOR STATE ECONOMIC-DEVELOPMENT POLICIES

Foreign direct investment is an important component of state economic development and state political economy, yet relatively little is know n about the political factors that influence foreign firm location dec isions. Previous econometric studies of firm location decisions have d ownplayed the role of political conditions (i.e., institutions, partie s, and policy interventions) in influencing firm location decisions, w hereas case studies have provided evidence of political effects that a re limited to specific firms. This study combines important elements f rom each of these perspectives into a regional- and time-effects Poiss on analysis of foreign manufacturing firm location decisions in the Am erican states from 1985 to 1990. The authors depict firm location deci sions as a function of several sets of variables, including labor mark et conditions, manufacturing density, infrastructure/transportation, a ccess to markets, taxes, the national context, state institutional ide ology, and state policy activism. Findings suggest that several of the se variables have significant impacts on foreign firm location decisio ns.