THOMAS A. PUGEL is an Assistant Professor of Economics and International Business at New York University Graduate School of Business Administration. He received a BA in Economics from Michigan State University and a PhD in Economics from Harvard University. His research interests include industrial organization, international trade and international taxation. He is the author of International Market Linkages and US Manufacturing. He received the Danielian Award in International Economics from the Department of Economics at Harvard University in 1975.
The determinants of foreign direct investment: An analysis of US manufacturing industries
Article first published online: 6 JAN 2012
Copyright © 1981 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Volume 2, Issue 4, pages 220–228, December 1981
How to Cite
Pugel, T. A. (1981), The determinants of foreign direct investment: An analysis of US manufacturing industries. Manage. Decis. Econ., 2: 220–228. doi: 10.1002/mde.4090020403
- Issue published online: 6 JAN 2012
- Article first published online: 6 JAN 2012
This study explores the determinants of foreign direct investment by analyzing the variation across US manufacturing industries in the extent of outward foreign direct investment. Three types of industry characteristics are hypothesized to explain this variation. Empirical support is found for four sources of ownership-specific advantages favoring foreign direct investment, new technology created through research and development, marketing abilities, organizational techniques and capital cost advantages. Support is found for the role of production scale economies in favoring centralization and hindering foreign direct investment, but results suggest only a weak role for transport costs in favoring decentralization and foreign direct investment. Producer concentration, perhaps reflecting oligopolistic competition, is positively related to foreign direct investment.