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Multinational production and investment provisions in preferential trade agreements
[Intra-industry foreign direct investment]

Author

Listed:
  • Sébastien Miroudot
  • Davide Rigo

Abstract

Using a novel database on multinational production (MP), this article investigates the impact of preferential trade agreements on foreign affiliates’ production activities. We find that trade agreements with investment provisions have a positive effect on MP. On average, signing an agreement including investment provisions is associated with increased MP up to 26% in the manufacturing sector and 34% in the services sector. Our findings suggest that investment provisions increase MP by facilitating multinationals operations in foreign markets, especially for activities requiring the proximity of suppliers and consumers, and by helping multinationals joining global value chains.

Suggested Citation

  • Sébastien Miroudot & Davide Rigo, 2022. "Multinational production and investment provisions in preferential trade agreements [Intra-industry foreign direct investment]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1275-1308.
    • Handle: RePEc:oup:jecgeo:v:22:y:2022:i:6:p:1275-1308.
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    More about this item

    Keywords

    Preferential trade agreements; multinational production; investment provisions; foreign affiliates; global value chains;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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