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Export, Invest Or Partner? The Impact Of Free Trade Agreements On Us Firms’ International Entry Methods

Author

Listed:
  • Austin Hayes

    (University of Edinburgh, U.K.)

  • Jovan Vojnovic

    (University of Edinburgh, U.K.)

Abstract

The choices available to firms entering foreign markets are complex yet crucial, and while Free Trade Agreements (FTAs) can provide essential support, the value of these remains unclear. This paper therefore evaluates the impact of FTAs on firms’ choice of entry into foreign markets. Using an extensive panel dataset of 137 trading partners of the United States, linear and non-linear multivariate regressions are employed to evaluate the separate relationships, while a non-parametric estimation is used to compare evidence across method of entry. Results reveal that FTAs actively promote exporting at the expense of investing and partnering. An interconnected relationship between methods is inferred and linked through their dependence on recipients’ cultural and societal differences to the US. Consequently, the recognised benefits of FTAs may be more nuanced, promoting exporting at the cost of other investment types.

Suggested Citation

  • Austin Hayes & Jovan Vojnovic, 2026. "Export, Invest Or Partner? The Impact Of Free Trade Agreements On Us Firms’ International Entry Methods," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 51(3), pages 19-59, September.
    • Handle: RePEc:ris:jecdev:023659
    DOI: 10.35866/caujed.2026.51.3.002
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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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