Inward Foreign Direct Investment: Employment and Location Issues

Different studies have arrived at different conclusions as to whether foreign direct investors in the United States prefer urban or rural locations. Location in "exurban" areas may explain this inconsistency. Using employment per square mile as a measure of urbanization, this study uses 2002 data to investigate how employment in foreign-owned facilities varies across the states. Using OLS estimates, it is concluded that foreign investors prefer more urbanized states, possibly reflecting exurban preferences. However, the estimates also suggest that foreign investors prefer less-skilled labor.