The Impact of Agenda 2000's Structural Policy Reform on FDI in the EU
25 Pages Posted: 15 Aug 2004
This paper analyses the effects of Agenda 2000's policy reform on the stocks of outward FDI to the European Union member countries. In a three-factors proximity-concentration New Trade Theory model we indentify the channels of influence on the FDI decision. In the empirical part, we estimate a dynamic panel data model and find that structural expenditures exert a significant positive impact on real stocks of outward FDI to EU countries. We simulate the Agenda 2000 program and obtain short-term and long-term effects of the EU country-specific changes in structural budgets on FDI to these countries.
Keywords: FDI, Gravity equation, European integration, Panel econometrics
JEL Classification: C33, F14, F15
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