Deep Trade Agreements and FDI in Partial and General Equilibrium: A Structural Estimation Framework

Mario Larch and Yoto Valentinov Yotov

No 10338, Policy Research Working Paper Series from The World Bank

Abstract: This paper quantifies the relationships between deep trade liberalization and foreign direct investment. To this end, it focuses on the effects of deep trade agreements. The analysis relies on a structural framework that simultaneously enables (i) estimating the direc t impact of deep trade agreements on foreign direct investment, (ii) translating the partial deep trade agreement estimates into general equilibrium effects on foreign direct investment; and (iii) obtaining partial deep trade agreement effects on trade and quantifying the impact of deep trade agreements on foreign direct investment through trade. The paper obtains sizeable, positive, and statistically significant estimates of the effects of deep trade agreements on both trade and foreign direct investment. A counterfactual analysis suggests that together with direct and indirect channels deep trade agreements have contributed.

Date: 2023-03-01
New Economics Papers: this item is included in nep-int
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http://documents.worldbank.org/curated/en/09990530 ... 204065b6826b43ea.pdf (application/pdf)

Related works:
Working Paper: Deep Trade Agreements and FDI in Partial and General Equilibrium: A Structural Estimation Framework (2022)
Working Paper: Deep Trade Agreements and FDI in Partial and General Equilibrium: A Structural Estimation Framework (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:10338

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