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Regional integration, foreign direct investment, and regional development

Author Info

Listed author(s):
  • Kokko, Ari

    ()

    (Stockholm School of Economics)

  • Gustavsson, Patrik

    ()

    (Stockholm School of Economics)

Abstract

Stressing that the liberalisation of international trade and investment may lead to a geographical concentration of economic activity, this paper discusses the scope for FDI as an instrument of regional policy aimed at offsetting the centripetal forces unleashed by liberalisation. Focusing on Sweden, the paper finds no signs that FDI has contributed to reducing income and development gaps in this country. More specifically, remote provinces that qualify for EU regional support - including support for FDI - have not performed better in terms of employment, labour productivity, and education levels than remote provinces that do not qualify for such support. An exception concerns the R&D intensity of firms (both foreign and indigenous), which tends to be higher in supported than unsupported remote regions.

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Paper provided by European Investment Bank, Economics Department in its series EIB Papers with number 5/2004.

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Length: 26 pages
Date of creation: 18 Jun 2004
Handle: RePEc:ris:eibpap:2004_005
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Keywords: Regional development; EU integration; Foreign direct investment;

Find related papers by JEL classification:

  • 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
  • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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  1. Markusen, James R. & Melvin, James R. & Maskus, Keith E. & Kaempfer, William, 1995. "International trade: theory and evidence," MPRA Paper 21989, University Library of Munich, Germany.
  2. Haaland, Jan I & Wooton, Ian, 1999. " International Competition for Multinational Investment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 631-649, December.
  3. Blomström, Magnus & Kokko, Ari, 1997. "Regional Integration and Foreign Direct Investment," CEPR Discussion Papers 1659, C.E.P.R. Discussion Papers.
  4. Roberto Basile & Davide Castellani & Antonello Zanfei, 2003. "Location choices of multinational firms in Europe: the role of national boundaries and EU policy," International Trade 0310001, EconWPA.
  5. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
  6. Richard Baldwin, 1989. "The Growth Effects of 1992," NBER Working Papers 3119, National Bureau of Economic Research, Inc.
  7. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, The European Institute of Japanese Studies.
  8. Brecher, Richard A. & Diaz Alejandro, Carlos F., 1977. "Tariffs, foreign capital and immiserizing growth," Journal of International Economics, Elsevier, vol. 7(4), pages 317-322, November.
  9. Steven Globerman & Daniel Shapiro, 2003. "Governance infrastructure and US foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(1), pages 19-39, January.
  10. Bhagwati, Jagdish N. & Brecher, Richard A., 1980. "National welfare in an open economy in the presence of foreign-owned factors of production," Journal of International Economics, Elsevier, vol. 10(1), pages 103-115, February.
  11. W. M. Cokden, 1967. "Protection and Foreign Investment," The Economic Record, The Economic Society of Australia, vol. 43(2), pages 209-232, 06.
  12. Philippe Martin, 1999. "Are European regional policies delivering?," Sciences Po publications info:hdl:2441/9343, Sciences Po.
  13. Kemp, Murray C. & Wan, Henry Jr., 1976. "An elementary proposition concerning the formation of customs unions," Journal of International Economics, Elsevier, vol. 6(1), pages 95-97, February.
  14. Yingqi A. Wei & V. N. Balasubramanyam (ed.), 2004. "Foreign Direct Investment," Books, Edward Elgar Publishing, number 3169.
  15. Head, C. Keith & Ries, John C. & Swenson, Deborah L., 1999. "Attracting foreign manufacturing: Investment promotion and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 197-218, March.
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Cited by:

  1. Kavvadia, Helen, 2012. "Towards Europe 2020 out of the economic crisis: is the Project Bond Initiative a means to financial stability and integration?," MPRA Paper 53696, University Library of Munich, Germany.
  2. Rammal, Hussain Gulzar & Zurbruegg, Ralf, 2006. "The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets," International Business Review, Elsevier, vol. 15(4), pages 401-414, August.
  3. Agnieszka Dorozynska & Tomasz Dorozynski, 2015. "Human Capital and FDI in Central and Eastern Europe," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 13(2 (Summer), pages 151-170.

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