Economic Integration and Foreign Direct Investment

Kjetil Bjorvatn

Working Papers from Norwegian School of Economics and Business Administration-

Abstract: In the last two decades we have witnessed a rapid increase in foreign direct investment (FDI). Simultaneously, there has been a process of economic integration between countries, bringing down costs of trade. At first sight, the increased importance of FDI seems paradoxical; we would expect lower trade costs to promote trade rather than direct investment. This paper demonstrates that a reduction in trade costs may indeed induce firms to choose FDI rather than exports. We also demonstrate that such a strategy is associated with a welfare loss for the world as a whole.

Keywords: ECONOMIC INTEGRATION; TRADE; INVESTMENTS (search for similar items in EconPapers)
JEL-codes: F15 F21 O16 (search for similar items in EconPapers)
Pages: 16 pages
Date: 1999
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:norgee:12/99

Access Statistics for this paper

More papers in Working Papers from Norwegian School of Economics and Business Administration- NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, HELLEVEIEN 30, 5035 BERGEN SANDVIKEN NORWAY.. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel (krichel@openlib.org).