Kiel Working Papers, Kiel Institute for World Economics
No 1420:
Inward FDI, Value Added and Employment in US States: A Panel Cointegration Approach
Elias Ajaga and Peter Nunnenkamp
Abstract: This study investigates the long-run relationships between
inward FDI and economic outcomes in terms of value added and employment at
the level of US states. Johansen’s (1988) cointegration technique and Toda
and Yamamoto’s (1995) Granger causality tests are applied to data for the
period of 1977 to 2001. We find cointegration as well as two-directional
causality between FDI and outcome variables. This holds for both measures
of FDI (stocks and employment in foreign affiliates) and independently of
whether we consider the states’ overall economy or their manufacturing
sector
Keywords: FDI stocks; FDI-related employment; gross state product; manufacturing; Granger causality; (follow links to similar papers)
JEL-Codes: F23,; O18,; O51; (follow links to similar papers)
23 pages, May 2008
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