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Structural Economic Vulnerability, Trade Policy and FDI Inflows

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  • Sèna Kimm Gnangnon

    (World Trade Organization (WTO), 154 Rue de Lausanne 1211 Geneva, Switzerland)

  • Harish Iyer

    (World Trade Organization (WTO), 154 Rue de Lausanne 1211 Geneva, Switzerland)

Abstract

This paper investigates two questions: first, how does countries' structural economic vulnerability (EVI) affect their foreign direct investment (FDI) inflows; second, how does EVI influence FDI inflows when host countries further liberalize their trade policies. The empirical analysis provides evidence that EVI influences negatively FDI inflows and that, in the context of greater trade policy liberalization, this vulnerability deters FDI only when it exceeds a certain threshold. These results call for enhanced cooperation between national governments and the international community to address developing countries, least-developed countries' EVI in order to ensure greater FDI inflows, which are critical for their economic development.

Suggested Citation

  • Sèna Kimm Gnangnon & Harish Iyer, 2017. "Structural Economic Vulnerability, Trade Policy and FDI Inflows," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-35, February.
    • Handle: RePEc:wsi:jicepx:v:08:y:2017:i:01:n:s1793993317500053
    DOI: 10.1142/S1793993317500053
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    Cited by:

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    2. Gnangnon, Sèna Kimm, 2019. "Trade Policy Space and Foreign Direct Investment Inflows," EconStor Preprints 196149, ZBW - Leibniz Information Centre for Economics.
    3. Monica Laura Zlati & Valentin Marian Antohi & Romeo Victor Ionescu, 2019. "Approaches on the Vulnerability of Romania's Economy in Terms of Budget Deficit and Inflation in a Continuous Form," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 128-137.
    4. Gnangnon, Sèna Kimm, 2018. "Effect of multilateral trade liberalization on foreign direct investment outflows amid structural economic vulnerability in developing countries," Research in International Business and Finance, Elsevier, vol. 45(C), pages 15-29.
    5. Sèna Kimm Gnangnon, 2022. "Aid for Trade, export product diversification, and foreign direct investment," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 534-561, February.
    6. Gnangnon, Sèna Kimm, 2022. "Effect of structural economic vulnerability on the participation in international trade," EconStor Preprints 262004, ZBW - Leibniz Information Centre for Economics.

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