Regional economic integration and the location of multinational enterprises

Carlo Altomonte ()

No 152, CESPRI Working Papers from CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy

Abstract: A theoretical model of international location choice is analyzed in a context of regional economic integration in which, consistently with the most recent evidence, countries conclude multilateral free trade agreements. Controlling for individual country and industry characteristics, it is found that in such a setup both vertical and horizontal multinational firms benefit from positive profit opportunities, with the interested region experiencing a parallel evolution of trade and FDI flows. After providing some empirical evidence of this finding, the model is tested through a probit panel estimation of FDI determinants in Central and Eastern Europe over the 1990-1998 period.

Keywords: economic integration; FDI. (search for similar items in EconPapers)
JEL-codes: F12 F15 F21 (search for similar items in EconPapers)
Date: 2004-01, Revised 2004-01
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