Foreign Direct Iinvestment and the Single Market

J. Peter Neary ()

No 200124, Working Papers from School Of Economics, University College Dublin

Abstract: This paper extends the theory of multinational corporations, identifying three distinct influences of internal trade liberalisation by a group of countries on the level and pattern of inward foreign direct investment (FDI). First, the tariff-jumping motive encourages plant consolidation. Second, the export platform motive favours FDI with only a single union plant relative to exporting, and may induce a firm which has never exported to invest. Finally, reduced internal tariffs increase competition from domestic firms, which dilutes the other motives and may induce a "Fortress Europe" outcome of multinationals leaving union markets even though external tariffs are unchanged.

Keywords: Foreign direct investment; market integration; multinational corporations; Single Market (search for similar items in EconPapers)
JEL-codes: F15 F23 F12 (search for similar items in EconPapers)
Date: 2001-10-15
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http://www.ucd.ie/economics/research/papers/2001/WP01.24.pdf First version, 2001 (application/pdf)

Related works:
Working Paper: Foreign Direct Investment and the Single Market (2001)
Working Paper: Foreign Direct Investment and the Single Market (2002)
Journal Article: Foreign Direct Investment and the Single Market (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:ucn:wpaper:200124

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