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The Effects of Preferential Trade Agreements on Foreign Direct Investment: Evidence from the African Caribbean Pacific Region

Aruna Gounder, Rodney Falvey () and Gulasekaran Rajaguru ()
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Aruna Gounder: Bond University
Gulasekaran Rajaguru: Bond University

Open Economies Review, 2019, vol. 30, issue 4, 695-717

Abstract: Abstract Our empirical analysis utilises panel data on bilateral FDI stocks from 34 OECD countries into 45 ACP countries over the period 2000–2017 to consider the role of PTAs in attracting FDI. We control for policies relating to trade, taxes and investment, along with other explanatory variables identified in the literature. We conclude the prevalence of market seeking FDI in the ACP region, with a role for regional integration in accessing surrounding market potential. We find no significant effect of PTAs on FDI in the Caribbean, while in Africa, the effects depend on the presence of a bilateral BIT.

Keywords: Foreign direct investment; Preferential trading arrangements; Regional integration (search for similar items in EconPapers)
JEL-codes: F14 F21 R12 (search for similar items in EconPapers)
Date: 2019
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