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Regional economic integration and the location of multinational enterprises

  • Carlo Altomonte


    (Universita' Bocconi and KU-Leuven)

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.

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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 152.

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Length: 30 pages
Date of creation: Jan 2004
Date of revision: Jan 2004
Handle: RePEc:cri:cespri:wp152
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