The location decisions of foreign multinational corporations (FMNCs) are analyzed using a conditional logit model with states as the choice set. We consider the establishment of new manufacturing plants and separately analyze the site selection of all MNCs, Japanese MNCs, and European MNCs. The results indicate that access to markets, labor market conditions, state promotional efforts to attract foreign investment, and state and local personal taxes are significant fadors in the location decision. The decision determinants for Japanese and European MNCs are found to be different.
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Friedman et al. (1992) studied this question.
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