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Regional economic integration and the location of multinational enterprises

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  • Carlo Altomonte

    (Universita' Bocconi and KU-Leuven)

Abstract

A theoretical model of international location choice is analyzed in a context of regional economic integration in which, consistently with the most recent evidence, countries conclude multilateral free trade agreements. Controlling for individual country and industry characteristics, it is found that in such a setup both vertical and horizontal multinational firms benefit from positive profit opportunities, with the interested region experiencing a parallel evolution of trade and FDI flows. After providing some empirical evidence of this finding, the model is tested through a probit panel estimation of FDI determinants in Central and Eastern Europe over the 1990-1998 period.

Suggested Citation

  • Carlo Altomonte, 2004. "Regional economic integration and the location of multinational enterprises," KITeS Working Papers 152, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jan 2004.
    • Handle: RePEc:cri:cespri:wp152
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    References listed on IDEAS

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    Cited by:

    1. Innwon Park & Soonchan Park, 2008. "Reform Creating Regional Trade Agreements And Foreign Direct Investment: Applications For East Asia," Pacific Economic Review, Wiley Blackwell, vol. 13(5), pages 550-566, December.
    2. Bosco Maria Giovanna, 2012. "FDI in Turkey: An Out-Of-Sample Analysis Of Unexploited Potential," Review of Middle East Economics and Finance, De Gruyter, vol. 7(3), pages 1-21, May.
    3. Jean-Francois HOARAU, 2009. "INVESTISSEMENTS DIRECTS eTRANGERS ET INTeGRATION ReGIONALE : UN eTAT DES LIEUX POUR LE MARCHe COMMUN D’AFRIQUE DE L’EST ET DU SUD," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 29, pages 69-103.
    4. Köller, Mareike, 2006. "Ausländische Direktinvestitionen in Irland: Eine theoriegestützte Analyse," University of Göttingen Working Papers in Economics 58, University of Goettingen, Department of Economics.

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    More about this item

    Keywords

    economic integration; FDI.;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • 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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