 Regional economic integration and geographic concentration of multinational firmsEuropean Economic Review, 2009, vol. 53, issue 3, 355-375 Abstract: A number of theoretical studies have predicted that preferential trade agreements (PTAs) raise outside multinationals' incentive to invest in the participating countries, especially in those that are integrated with larger markets and have lower production costs. The hypothesis has, however, not been tested empirically. This paper addresses the issue by estimating the impact of PTAs on countries' ability to attract multinationals. The evidence is broadly consistent with expectations. The formation of PTAs leads to an increase in FDI by outside multinationals, but the effect varies sharply with the size of integrated markets and countries' comparative advantage. Countries integrated with larger markets experience a greater increase in total and export-platform FDI. Those with a higher labor endowment also attract more FDI especially in labor-intensive industries, but at the expense of their labor-scarce PTA partners. Keywords: Regional; economic; integration; Multinational; firms; Geographic; concentration; Market; potential; Comparative; advantage (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:53:y:2009:i:3:p:355-375 Access Statistics for this article European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer More articles in European Economic Review from Elsevier |
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