Foreign direct investment in U.S. metropolitan areas, 1979-1983

Ordinary least-squares multiple regression is used to construct a path diagram showing the direct and indirect effects of corporate location factors on the share of foreign direct investment (FDI) in the 44 largest metropolitan areas in the United States during the period 1979-1983. The results show that the metropolitan areas with the most rapid population growth over the period 1970-1980 correspond to the centers with greater shares of FDI. The growth in Fortune measure, an indicator of the market dynamics of the metropolitan areas, has a direct effect on the level of investment. The growth of employment in manufacturing and in finance, insurance, and real estate, used as indexes of labor supply and of producer services, have indirect effects on FDI. The results show that foreign direct investors tend to concentrate in centers offering strong markets and strong bases of producer services, regardless of their regional locations.