Regional Integration Agreements and Foreign Direct Investment: Theory and Preliminary Evidence

23 Pages Posted: 22 Mar 2003

See all articles by David Sapsford

David Sapsford

University of Liverpool Management School (ULMS) - Economics Division

David Griffiths

Lancaster University - International Business Research Group

V. N. Balasubramanyam

Lancaster University - International Business Research Group

Abstract

In this paper we investigate the effects which economic integration exerts upon the magnitude and character of foreign direct investment (FDI) flows. Drawing upon the existing literature on trade flows we investigate the impact of regional integration agreements (RIAs) on FDI flows and analyse their welfare implications. An empirical investigation of some 381 bilateral FDI flows in 1995 is presented, the results of which suggest, in broad terms, that it is not the presence of RIAs that determines the magnitude and direction of bilateral FDI flows but rather the economic characteristics of both the investing and the host country.

Suggested Citation

Sapsford, David and Griffiths, David and Balasubramanyam, V. N., Regional Integration Agreements and Foreign Direct Investment: Theory and Preliminary Evidence. Available at SSRN: https://ssrn.com/abstract=320688

David Sapsford (Contact Author)

University of Liverpool Management School (ULMS) - Economics Division ( email )

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David Griffiths

Lancaster University - International Business Research Group

Lancaster LA1 4YF
United Kingdom

V. N. Balasubramanyam

Lancaster University - International Business Research Group ( email )

Lancaster LA1 4YF
United Kingdom

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