 Does Economic Integration Cause Foreign Direct Investment?Massimo Motta () and George Norman () International Economic Review, 1996, vol. 37, issue 4, 757-83 Abstract: The authors analyze the effect of economic integration on oligopolists' international trade and foreign direct investment activities, using a three-country, three-firm model. Increased country size leads to dispersed foreign direct investment, while improved market accessibility leads to export-platform foreign direct investment. Increased intraregional market accessibility prompts outside firms to invest in the regional bloc, reducing product prices, profits of intrabloc firms, and increasing total surplus. Integrating economies are more likely to gain from improving intraregional market accessibility than from tougher external trade policy, and may wish to offer investment incentives to encourage foreign direct investment by outside firms. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. Date: 1996 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ier:iecrev:v:37:y:1996:i:4:p:757-83 Ordering information: This journal article can be ordered from Access Statistics for this article International Economic Review is currently edited by Harold L. Cole More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC. |
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