Regional Integration and the (Re)Distrubtion of Foreign Direct Investment between Asymmetric Hosts
We analyze the impact of economic integration on the activities of multinational enterprises in a general equilibrium model with asymmetric countries. Foreign direct investment (FDI) inflows are likely only to the extent that multinationals have not already shifted production to the integrating region. Integration could lead to industry rationalization that reduces FDI if tariffjumping is prevalent before liberalization. We find a magnification effect of the level of external protection on both multinational entry and exit. Low-protection countries will have greater MNE entry than high-protection countries due to wage differences.
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- Blomström, Magnus & Kokko, Ari, 1997.
"Regional Integration and Foreign Direct Investment,"
SSE/EFI Working Paper Series in Economics and Finance
172, Stockholm School of Economics.
- Magnus Blomstrom & Ari Kokko, 1997. "Regional Integration and Foreign Direct Investment," NBER Working Papers 6019, National Bureau of Economic Research, Inc.
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CESifo Working Paper Series
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Elsevier, vol. 46(2), pages 183-203, December.
- Shabtai Donnenfeld, 2003. "Regional Blocs and Foreign Direct Investment," Review of International Economics, Wiley Blackwell, vol. 11(5), pages 770-788, November.
- Heinrich, Jeff & Eby Konan, Denise, 2000. "Foreign Direct Investment and Host-Country Trading Blocs," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 565-584.
- Ignatius J. Horstmann & James R. Markusen, 1990. "Endogenous Market Structures in International Trade," NBER Working Papers 3283, National Bureau of Economic Research, Inc.
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