Abstract
We develop hypotheses for the implications of regional economic integration on foreign direct investment (FDI) from insider and outsider countries contingent on member nations’ country-specific characteristics. We find that following regional integration (1) on average there is an increase in inward FDI, and (2) structural determinants such as the host country’s market size, cultural and geographic distances, and institutional efficiency have a significantly different impact than when the host nation was outside the integrated area. Common economic area membership is associated with greater FDI flows, with the larger members gaining more; furthermore, insider FDI is less sensitive to labor cost, whereas the host country’s institutional efficiency is an even more positive determinant of insider FDI.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
