A Spatial and Temporal Model of Foreign Direct Investment in the United States

Abstract

This study analyzes the spatial distribution of foreign direct investment among metropolitan areas in the United States for the periods 1974–1978 and 1979–1983. A model is developed to test the importance of population size, population growth rate, and per capita retail sales in determining levels of foreign investment. Casetti's expansion method is used to test whether or not the regression parameters of the explanatory variables are spatially and temporally unstable. The results indicate that the model varies both spatially and over time. Heavily concentrated in northeastern metropolitan areas in 1974–1978, especially New York, foreign direct investment dispersed widely to the south and west in 1979–1983. In keeping with the general transformation of the U.S. metropolitan economy, foreign direct investment shifted noticeably from the manufacturing sector to the service sector during the study period.