Economic Integration and Foreign Direct Investment
AbstractIn the last two decades we have witnessed a rapid increase in foreign direct investment (FDI). Simultaneously, there has been a process of economic integration between countries, bringing down costs of trade. At first sight, the increased importance of FDI seems paradoxical; we would expect lower trade costs to promote trade rather than direct investment. This paper demonstrates that a reduction in trade costs may indeed induce firms to choose FDI rather than exports. We also demonstrate that such a strategy is associated with a welfare loss for the world as a whole.
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Bibliographic InfoPaper provided by Norwegian School of Economics and Business Administration- in its series Papers with number 12/99.
Length: 16 pages
Date of creation: 1999
Date of revision:
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Postal: NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, HELLEVEIEN 30, 5035 BERGEN SANDVIKEN NORWAY.
Phone: 5595 9000
Fax: 5595 9100
Web page: http://www.nhh.no/
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ECONOMIC INTEGRATION ; TRADE ; INVESTMENTS;
Find related papers by JEL classification:
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- F15 - International Economics - - Trade - - - Economic Integration
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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