THE LOCATION OF FOREIGN DIRECT-INVESTMENT FOR UNITED-STATES REAL-ESTATE - AN EMPIRICAL-ANALYSIS

Based on site characteristics, this study examines the location preferences of investors from Canada, Japan, and the United Kingdom for U.S. real estate. The analysis uses the state as the unit of observation for the 1980-1989 period. Using a random effects model that pools time-series and cross-sectional data, we identify important factors that explain foreign investors' real property location choice in the U.S. Foreigners prefer states with large, developed, and active economies. Interestingly, a broad measure of the state taxation variable is found to be negative and significant, suggesting that taxation is a deterrent to foreign investors.