Foreign Direct Investment and Host-Country Trading Blocs |
Jeff Heinrich, Denise Eby Konan, |
University of Wisconsin-Whitewater University of Hawaii |
Copyright ©2000 The Journal of Economic Integration |
ABSTRACT |
|
We consider the impact of preferential trade agreements (PTAs) on horizontal foreign direct investment (FDI) coming from parent countries outside the PTA. While easier access to a larger market due to a PTA may justify new FDI, preexisting investments may be rationalized as firms concentrate production in a single plant in the PTA. Which effect dominates depends on the extent of pre-PTA tariff jumping. The number of firms in the industry and non-PTA welfare may rise or fall. PTA welfare increases regardless of PTA-induced changes in inward FDI. |
Keywords:
Multinational Enterprise | Foreign Direct Investment | Regional Integration | Preferential Trade Agreements
|
|
|
REFERENCE |
1. |
Blomström, M., and A. Kokko (1997), "Regional Integration and Foreign Direct Investment: A Conceptual Framework and Three Cases," World Bank Policy Research Working Paper #1750. |
|
|
2. |
Robson, P., and I. Wooton (1993), "The Transnational Enterprise and Regional Economic Integration," Journal of Common Market Studies 31, 71-90. |
|
|
|
|
|
|