 The importance of heterogeneity in determining the effects of preferential trade agreements on Foreign Direct InvestmentNorikatsu Hiraide, Leilei Shen and Peri Silva () The World Economy, 2020, vol. 43, issue 12, 3262-3295 Abstract: This paper investigates the importance of PTA formation in attracting inflows of foreign direct investment (FDI). In particular, we examine the heterogeneous effects of different types of PTAs (FTAs or CUs) on the extensive and intensive margins of FDI and on how the interdependence among various PTAs may affect a country's ability to attract FDI inflows. We find that the larger the preferential markets to which a country has access, the larger the FDI inflows the country receives. Furthermore, we find that the type of PTA matters in determining FDI inflows. In this case, we find that the formation of CUs tends to promote more FDI inflows than the formation of FTAs. Our findings also indicate that the formation of PTAs significantly affects FDI through the intensive margin, rather than through the extensive margin. Importantly, notice that these effects are driven by the preferential markets to which a country has access and that have not established a PTA with the FDI‐originating (home) country, confirming that PTA interdependence matters in determining FDI inflows. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:43:y:2020:i:12:p:3262-3295 Ordering information: This journal article can be ordered from Access Statistics for this article The World Economy is currently edited by David Greenaway More articles in The World Economy from Wiley Blackwell |
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