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Does Economic Integration Cause Foreign Direct Investment?
Open accessAbstract
The authors analyze the effect of economic integration on oligopolists' international trade and foreign direct investment activities, using a three-country, three-firm model. Increased country size leads to dispersed foreign direct investment, while improved market accessibility leads to export-platform foreign direct investment. Increased intraregional market accessibility prompts outside firms to invest in the regional bloc, reducing product prices, profits of intrabloc firms, and increasing total surplus. Integrating economies are more likely to gain from improving intraregional market accessibility than from tougher external trade policy, and may wish to offer investment incentives to encourage foreign direct investment by outside firms. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Citations
Cited by
Trade, Foreign Direct Investment, and International Technology Transfer: A Survey
Saggi, K. (2002) · The World Bank Research Observer · doi:10.1093/wbro/17.2.191 · Cited by 732
Export-Platform Foreign Direct Investment
Ekholm, K., Forslid, R., & Markusen, J. R. (2007) · Journal of the European Economic Association · doi:10.1162/jeea.2007.5.4.776 · Cited by 626
Endogenous R&D and foreign direct investment in international oligopolies
Petit, M.-L., & Sanna-Randaccio, F. (2000) · International Journal of Industrial Organization · doi:10.1016/s0167-7187(98)00028-9 · Cited by 131
Metadata
- Authors
- Motta, M., & Norman, G.
- Venue
- International Economic Review
- Publisher
- JSTOR
- Published
- 1996-11
- Volume
- 37
- Issue
- 4
- Pages
- 757
- ISSN
- 0020-6598 (ISSN-L)
- OpenAlex
- W1604796506
- Cited by
- 256
- References
- 0
- FWCI
- 4.19
- Type
- journal article
- Language
- en
- Open access
- green
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