SECTORAL DIFFERENCES IN THE DETERMINANTS OF THE LOCATION OF FOREIGN DIRECT-INVESTMENT IN AMERICAN MANUFACTURING

Foreign direct investment in the United States is an integral part of the competition among global industrial core regions. Most foreign inv estment in the U.S. originates in Europe, Canada, and Japan. Acquisiti on rather than new plant establishment is the favored mode of investme nt and the interregional supply of potential acquisition candidates co nstrains foreign investors' locational choices. This paper provides an analysis of the location of foreign employment in 15 disaggregated se ctors across U.S. states in 1990. The results show that foreign firms concentrate employment in existing regions of production. Foreign inve stments in most raw materials processing sectors particularly favor th ese places. Some decentralization has occurred in several sectors, esp ecially food, paper, chemicals and petroleum, rubber and plastics, sto ne, clay and glass products, and primary metals. Other significant det erminants of location include labor force characteristics and certain regional preferences. No evidence was found in our analysis of disaggr egate sectors that foreign investors avoid strong unions more than the ir domestic counterparts.