Location Determinants of New Foreign-Owned Manufacturing Plants

In this paper we examine the county‐level pattern of new foreign‐owned manufacturing plants in the United States from 1989 through 1994. We construct a model to produce insights into the differences in the location of these plants among Bureau of Economic Analysis regions, as well as between rural and urban counties. Higher levels of economic size, educational attainment, the existing manufacturing base, and transportation infrastructure are found to be associated with larger numbers of new foreign‐owned plants. Meanwhile, higher levels of taxes and labor‐intensiveness are found to be associated with smaller numbers of new plants. Comparing regions, we find that the main advantages of the Southeast region stem from a relatively high manufacturing base and relatively low taxes. Comparing urban with rural counties, we find that urban counties possess more favorable average values for nearly all the explanatory variables.