Douglas M. Sanford, Huiping Dong
This article investigates the influence of tourism on foreign directinvestment. Firms’ foreign direct investment (FDI ) decisions require detailed information about the host country’ s competitors, regulatory environment, work ethic, and culture. Incorporating tourism im-proves on existing research into FDI, which does not include meas-ures for this complex information. Empirical analysis using a TOBIT methodology shows a positive and significant relationship between tourism and subsequent new foreign direct investment in the USA.Surprisingly, the analysis does not support expected industry-specific effects, which suggests that tourism associates with increased invest-ment in capital-intensive as well as service industries.
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