Foreign Direct Investment and Regional Trade Agreements : The Market Size Effect Revisited / Florence Jaumotte.

Format:

Book

Government document

Author/Creator:

Jaumotte, Florence.

Series:

IMF Working Papers; Working Paper ; No. 2004/206

IMF Working Papers

Language:

English

Subjects (All):

Investments, Foreign--Developing countries.

Investments, Foreign.

International trade.

Trade blocs--Developing countries.

Trade blocs.

Physical Description:

1 online resource (32 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2004.

Language Note:

English

Summary:

The paper investigates whether the market size of a regional trade agreement (RTA) is a determinant of foreign direct investment (FDI) received by countries participating in the RTA. This hypothesis is tested on a sample of 71 developing countries during the period 1980-99. Evidence is found that the RTA market size had a positive impact on the FDI received by member countries, even more so in the 1990s when such agreements were revived and became more widespread. The size of domestic population also seemed to matter, possibly because of its effect on the availability of the labor supply. It appears, however, that not all countries in the RTA benefited to the same extent from the RTA: countries with a relatively more educated labor force and/or a relatively more stable financial situation tended to attract a larger share of FDI at the expense of their RTA partners. This evidence suggests it is essential for all RTA countries to improve their business environment to the best available in the region. Finally, a partial negative correlation between the FDI received by RTA countries and that received by non-RTA countries possibly reflects a diversion of FDI from non-RTA to RTA countries. As an illustration, FDI benefits are simulated from the creation of a regional trade agreement between Algeria, Morocco, and Tunisia.

Contents:

""Contents""; ""I. INTRODUCTION""; ""II. RTA AND FDI: A FIRST LOOK AT THE DATA""; ""III. THE ECONOMETRIC MODEL""; ""IV. RESULTS""; ""V. APPLICATION TO MAGHREB COUNTRIES""; ""VI. CONCLUSION""; ""References""

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF cover (ebrary, viewed July 2, 2015).

ISBN:

9786613824691

9781462348657

1462348653

9781452732886

1452732884

9781283512244

1283512246

9781451919219

1451919212