The Distribution of Foreign Investment and Regional Policy
Dresden University of Technology - Faculty of Economics and Business Management
Centre for Studies in Social Sciences, Calcutta; City University of Hong Kong (CityUHK) - Department of Economics & Finance
University of Dortmund
Review of Regional Research, Forthcoming
In this note economic integration is viewed as a situation where countries within a union coordinate their industrial policies. We demonstrate that greater regional policy coordination between countries may induce more specialization instead of the intended diversification in interregional allocations of foreign investment. Thus international capital flows tend to become more concentrated in an integrated economy. This is in contrast to the objectives of regional policy of the European union.
Number of Pages in PDF File: 8
Keywords: Economic integration, foreign investment, regional policy, specialization, diversification
JEL Classification: F15Accepted Paper Series
Date posted: June 11, 2005
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