The Attraction of Foreign Manufacturing Investments: Investment Promotion and Agglomeration Economies

31 Pages Posted: 17 Jul 2000 Last revised: 31 Jul 2008

See all articles by Keith Head

Keith Head

University of British Columbia (UBC) - Sauder School of Business

John C. Ries

University of British Columbia (UBC) - Sauder School of Business; University of British Columbia (UBC) - SFU-UBC Centre for the Study of Government and Business

Deborah L. Swenson

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 1994

Abstract

We study Japanese investments between 1980 and 1992 to assess the effectiveness of state promotion efforts in light of strong agglomeration economies in Japanese investment. Two policy variables are consistently shown to influence the location of investment - foreign trade zones and labor subsidies. We use simulations to explore the impact these policies had on the geographic distribution of Japanese investment. The simulations reveal that in aggregate promotion programs largely offset each other; however, unilateral withdrawal of promotion causes individual states to lose substantial amounts of foreign investment.

Suggested Citation

Head, Keith Charles and Ries, John C. and Swenson, Deborah L., The Attraction of Foreign Manufacturing Investments: Investment Promotion and Agglomeration Economies (October 1994). NBER Working Paper No. w4878. Available at SSRN: https://ssrn.com/abstract=226520

Keith Charles Head (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8492 (Phone)
604-822-8477 (Fax)

John C. Ries

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

University of British Columbia (UBC) - SFU-UBC Centre for the Study of Government and Business ( email )

2053 Main Mall
Vancouver, British Columbia V6T 1Z2
Canada
604-822-8493 (Phone)
604-822-8477 (Fax)

Deborah L. Swenson

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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