The Determinants of United States Foreign Direct Investment: an Emphasis on the Experience Effect.

Treating the U.S. as the home country, this study examines the impact of host country characteristics, industry and firm characteristics of the home country on foreign direct investment (FDI) altogether, and assesses the impact of experience on FDI at the country, industry, and firm levels. To test the hypothesized impact of various characteristics on FDI, three empirical studies based on data from U.S. government, United Nations, and corporate annual reports are conducted. The first study, using a structural equation model, finds a significant impact of host country characteristics and the experience effect at the country level on FDI in 1968, 1977, and 1982 though the impact changes over time. The second study, using ordinary least squares, Tobit, and non-linear weighted least squares, demonstrates the significant impact of host country characteristics, industry characteristics, and experience effect at the industry level on FDI in 1975. The impact of some characteristics is found to be different for investments in developed countries and in less developed countries. The third study, using a logit model, finds that host country characteristics, industry characteristics, firm characteristics, and the experience effect at the firm level have a significant effect on FDI in 1982. The impact of some characteristics is different for investments in developed countries and in less developed countries, and for investments by multinational corporations and by non-multinational corporations. The study derives implications for governments and firms. First, the results identify potential areas of public policy that can be modified to promote or attract FDI. Second, depending upon the type of firm, the study suggests strategic and operational alternatives for the firm to exploit competitive advantages across different markets.PhDManagementUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/161608/1/8720362.pd