Foreign Direct Investment and Regional Economic Performance


  • Martin Williams, Professor Emeritus, Northern Illinois University, DeKalb, Il 60115; e-mail:


Although foreign direct investment into developed economies continues to show dramatic growth, little consensus exists over either its national or regional impacts. The lack of empirical evidence, particularly on a sub-national level, adds to the uncertainty over the efficacy of regional development strategies focused on attracting foreign investment. The present research uses book value and employment measures of U.S. state-level FDI activity to assess the impact of foreign capital on regional growth and productivity performance. The results imply a vital role for FDI in stimulating regions within well-integrated, developed economies.