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Regional Economic Integration and Foreign Direct Investment: The North American Experience

Author

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  • Blomström, Magnus

    (The Euopean Institute of Japanese Studies)

  • Kokko, Ari

    (The European Institute of Japanese Studies)

  • Globerman, Steven

    (Western Washington University)

Abstract

This paper examines the relationship between regional economic integration and FDI in North America, where two RIAs have been established over the past decade: a bilateral free trade agreement between Canada and the U.S. (CUSTA) and a trilateral agreement (NAFTA) incorporating Mexico as well. The North American experiences suggest substantially more modest impacts of regional trade agreements on intra-regional trade creation and extra-regional FDI stimulation than is associated with the earlier stages of EU integration. At the same time, there is support for the European findings that trade and investment impacts will differ across countries within the integrating region. These results serve as a caution against generalizing from earlier experience when forecasting the impacts of expanded economic integration within Europe or the Americas. The consequences of regional economic integration are sufficiently conditioned by inherited policies, as well as by existing macroeconomic conditions, to make extrapolation from historical experience very risky and potentially misleading.

Suggested Citation

  • Blomström, Magnus & Kokko, Ari & Globerman, Steven, 1998. "Regional Economic Integration and Foreign Direct Investment: The North American Experience," SSE/EFI Working Paper Series in Economics and Finance 269, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0269
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    Cited by:

    1. Shiteng Xu & Jeff Gow & Youzhi Chen & Yahua Zhang & Zhibin Huang, 2019. "The Determinants Of Outward Foreign Direct Investment Strategies Of Chinese Energy Firms," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(04), pages 1019-1036, September.
    2. Alvaro Pereira & João Jalles & Martin Andresen, 2012. "Structural change and foreign direct investment: globalization and regional economic integration," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(1), pages 35-82, April.
    3. Salike, Nimesh, 2010. "Effect of regional integration agreement on foreign direct investment : A theoretical perspective," MPRA Paper 31859, University Library of Munich, Germany.
    4. Wilfried Altzinger & Peter Egger & Peter Huber & Kurt Kratena & Michael Pfaffermayr & Michael Wüger, 2000. "Teilprojekt 5: Transnationale Direktinvestitionen und Kooperationen," WIFO Studies, WIFO, number 19587, Juni.

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    More about this item

    Keywords

    Regional integration; foreign direct investment; North America;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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