IDEAS home Printed from https://ideas.repec.org/p/deg/conpap/c013_002.html
   My bibliography  Save this paper

Regional Integration and the (Re)Distrubtion of Foreign Direct Investment between Asymmetric Hosts

Author

Listed:
  • Denise Eby Konan
  • Jeff Heinrich

Abstract

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.

Suggested Citation

  • Denise Eby Konan & Jeff Heinrich, 2008. "Regional Integration and the (Re)Distrubtion of Foreign Direct Investment between Asymmetric Hosts," DEGIT Conference Papers c013_002, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c013_002
    as

    Download full text from publisher

    File URL: http://degit.sam.sdu.dk/papers/degit_13/c013_002.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Shabtai Donnenfeld, 2003. "Regional Blocs and Foreign Direct Investment," Review of International Economics, Wiley Blackwell, vol. 11(5), pages 770-788, November.
    2. Blomström, Magnus & Kokko, Ari, 1997. "Regional Integration and Foreign Direct Investment," CEPR Discussion Papers 1659, C.E.P.R. Discussion Papers.
    3. 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.
    4. Bernhofen, Daniel M., 1998. "Intra-industry trade and strategic interaction: Theory and evidence," Journal of International Economics, Elsevier, vol. 45(1), pages 77-96, June.
    5. Raff, Horst, 2004. "Preferential trade agreements and tax competition for foreign direct investment," Journal of Public Economics, Elsevier, pages 2745-2763.
    6. Markusen, James R. & Venables, Anthony J., 1998. "Multinational firms and the new trade theory," Journal of International Economics, Elsevier, pages 183-203.
    7. Yingqi A. Wei & V. N. Balasubramanyam (ed.), 2004. "Foreign Direct Investment," Books, Edward Elgar Publishing, number 3169, April.
    8. Raff, Horst, 2004. "Preferential trade agreements and tax competition for foreign direct investment," Journal of Public Economics, Elsevier, pages 2745-2763.
    9. Ignatius J. Horstmann & James R. Markusen, 1990. "Endogenous Market Structures in International Trade," NBER Working Papers 3283, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    multinational enterprise; foreign direct investment; economic integration; preferential trade agreements;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:deg:conpap:c013_002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jan Pedersen). General contact details of provider: http://edirc.repec.org/data/iehhsdk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.