Global Smokestack Chasing: A Comparison of the State-Level Determinants of Foreign and Domestic Manufacturing Investment

As more domestic manufacturers have fallen prey to global competition, the American states have been forced to broaden their targets of “smokestack chasing” to include not just U.S. manufacturers but also their successful foreign counterparts. However, this two-pronged development strategy is plagued by several dilemmas: 1) the possibility that domestic and foreign manufacturers may use different locational criteria; 2) nativistic opposition to foreign employers; and 3) the fact that states' financial resources and business policies may be too meager to influence corporate investment decisions. Drawing on Gordon, Edwards, and Reich's (1982) social structures of accumulation framework, this paper argues that these dilemmas are symptomatic of a more general problem of the “shrinking state” associated with the latest phase of U.S. capitalist development. Results of a pooled, cross-sectional, time-series analysis of manufacturing investment across the 48 contiguous states between 1978 and 1985 also confirm that foreign firms are indeed less sensitive to the presence of unions than domestic firms, are vulnerable to economic nationalist opposition during gubernatorial election years, and that most state-sponsored economic development policies have no positive impact on either foreign or domestic manufacturing investment.

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