The Rise of Cities: Three Essays on the Spatial Reconfiguration of FDI in the U.S.

This dissertation examines the rise of so-called secondary cities in the US and the subsequent “new” geography of foreign direct investment (FDI) in the country. The recent trend toward increased FDI into more economically isolated cities in the U.S. raises important questions concerning the determinants of subnational FDI in advanced economies. This dissertation investigates the role of market proximity, housing prices, industry clusters, labor availability, and agglomeration in this new geography of FDI in the US. In the first part, multiple market proximity variables that take into account different measures of geographic distance and proximity were created. The second part of the dissertation employs a series of multilevel analyses on sectoral FDI in the country. The last part brings all the factors together in an analysis involving spatial modeling. The results show that the FDI dynamics at the subnational level do not match the previously seen results at higher levels of aggregation. New foreign investment projects are increasingly going to economically remote metro areas, which increasingly offer the talent these projects need and the opportunity to significantly cut costs as their housing markets are more affordable. An investigation of subnational FDI in the US can contribute to a better understanding of FDI location decisions in advanced economies and consequently better policy implementation to attract it.