U.S. corporate investment and foreign penetration: Imports and inward foreign direct investment

This paper examines the joint effect of imports and inward foreign direct investment (iFDI), the two primary entry forms of foreign companies to the U.S. product market, on domestic firms’ capital investment decisions. We develop novel firm-level measures to gauge the impact of imports and iFDI. We show that increased import competition significantly reduces U.S. firms’ investment; in contrast, the effect of iFDI on investment is largely...