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Multinational Corporations and Pacific Regionalism

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  • Philippa Dee

Abstract

The purpose of this paper is twofold. The first is to determine empirically whether there is a unique regional model of foreign direct investment (FDI) somewhere in the Asia–Pacific region, driven by complex ‘network’ behaviour of multinational corporations. The second is to determine empirically whether the investment provisions of preferential trade agreements (PTAs) have had any influence on this regional investment behaviour. The results suggest that the answer to the first question is affirmative and the answer to the second is negative. They show that when FDI and trade are sufficiently driven by fundamentals, as in Asia, the resulting network patterns of investment do not need to be boosted by investment provisions of PTAs. Further, the network patterns can be sufficiently strong to insulate a country from investment diversion when the FDI source countries play the PTA game elsewhere. So the investment provisions of PTAs pose neither a threat nor a promise to FDI in the Asian region. But a very real threat may come from the trade provisions of PTAs.

Suggested Citation

  • Philippa Dee, 2006. "Multinational Corporations and Pacific Regionalism," Asia Pacific Economic Papers 358, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:csg:ajrcau:358
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    File URL: https://crawford.anu.edu.au/pdf/pep/pep-358.pdf
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    References listed on IDEAS

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    1. Eduardo Levy Yeyati & Christian Daude & Ernesto Stein, 2002. "The FTAA and the Location of FDI," Business School Working Papers diecisiete, Universidad Torcuato Di Tella.
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    Cited by:

    1. Thomas J. Prusa & Robert Teh, 2010. "Protection Reduction and Diversion: PTAs and the Incidence of Antidumping Disputes," NBER Working Papers 16276, National Bureau of Economic Research, Inc.
    2. Shiro Armstrong, 2009. "Japanese FDI in China: determinants and performance," Asia Pacific Economic Papers 378, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    3. Li, Qiaomin & Scollay, Robert & Maani, Sholeh, 2016. "Effects on China and ASEAN of the ASEAN-China FTA: The FDI perspective," Journal of Asian Economics, Elsevier, vol. 44(C), pages 1-19.
    4. Shiro Armstrong & Peter Drysdale, 2009. "The Influence of Economics and Politics on the Structure of World Trade and Investment Flows," EABER Working Papers 22762, East Asian Bureau of Economic Research.
    5. Yusaku Horichi & Jun Saito, 2009. "Rain, Elections and Money: The Impact of Voter Turnout on Distributive Policy Outcomes in Japan," Asia Pacific Economic Papers 379, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.

    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration

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