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Multilateral Trade Liberalisation and FDI: An Analytical Framework for the Implications for Trading Blocs

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  • Ghazalian, Pascal L.
  • Cardwell, Ryan T.

Abstract

The proliferation of regional integration agreements (RIAs) over the past several years has led to significant changes in the global configuration of trade and investment activity. Multinational enterprises now face the prospect of multilateral trade liberalisation that could significantly affect the foreign direct investment (FDI) incentive structures that were established within the range of current RIAs. RIAs that provide preferential market access to member countries modify firms’ incentives to undertake FDI activities and can lead to various permutations of trade and investment creation and diversion. This article provides an analytical framework for understanding the implications of multilateral trade liberalisation for the incentive structures of firms to conduct FDI and discusses how multilateral liberalisation could undo many of the FDI activities that were initiated in response to previous RIAs.

Suggested Citation

  • Ghazalian, Pascal L. & Cardwell, Ryan T., 2010. "Multilateral Trade Liberalisation and FDI: An Analytical Framework for the Implications for Trading Blocs," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 11(1), pages 1-21, May.
    • Handle: RePEc:ags:ecjilt:90590
    DOI: 10.22004/ag.econ.90590
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    File URL: https://ageconsearch.umn.edu/record/90590/files/ghazaliancardwell11-1.pdf
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    References listed on IDEAS

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    Cited by:

    1. Cardwell, Ryan, 2014. "Madly Off in All Directions - The Pursuit of Preferential Trade Agreements by North American Governments," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 15(2), pages 1-8.

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