Economic Integration and Foreign Direct Investment: Review of Main Theoretical Concepts

Adam Marszk

Entrepreneurial Business and Economics Review, 2014, vol. 2, issue 3, 79-89

Abstract: The objective of the article is to present key theoretical relationships between economic integration and FDI flows. The research method used is a comprehensive literature review. Most influential publications, including books, articles, working papers, etc. contributing to the subject were identified. The review consists of two essential parts: theory of FDI, and theoretical relationships between economic integration and FDI flows. Finally, the outlined publications were discussed and critiqued, including the empirical context, i.e. empirical verification of the presented links. In some areas the theoretical impact of integration on FDI is unclear, thus being an obstacle to making informed policy decisions. According to various theoretical concepts, economic integration should influence FDI flows mostly positively, due to e.g. reduced trade barriers and extended market sizes. A number of theoretical concepts support the positive impact of economic integration on FDI flows. Possible directions of future research include comparisons of blocs with members at different development level, and further development of FDI theories in order to account for integration effects. For the time being, this paper seems to be the most comprehensive and up-to-date survey of this topic.

Keywords: economic integration; regional trade agreements; foreign direct investments (FDI); multinational corporations (MNC); trade (search for similar items in EconPapers)
JEL-codes: F15 F21 F23 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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