The Role of Skill Endowments in the Structure of U.S. Outward Foreign Direct Investment

This paper reports the results of an empirical study of the industry and country determinants of U.S. outward foreign direct investment (FDI). These results contribute to the literature in two dimensions. First, they demonstrate that the structure of U.S. FDI reflects an interaction between country skilled-labor abundance and industry skilled-labor intensities that is consistent with comparative advantage. Second, they confirm the results of early studies that market access plays an important role in the structure of U.S. FDI. Together these results paint a broad picture of the structure of U.S. FDI that casts light on the predictions of the theory of multinational enterprise. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.