The Impact of Agenda 2000's Structural Policy Reform on FDI in the EU

25 Pages Posted: 15 Aug 2004

See all articles by Fritz Breuss

Fritz Breuss

Vienna University of Economics and Bus. Admin., Europe Institute

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment; Ludwig-Maximilians University of Munich; CESifo (Center for Economic Studies and Ifo Institute for Economic Research

Michael Pfaffermayr

University of Innsbruck - Department of Economics; Austrian Institute of Economic Research

Abstract

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

Suggested Citation

Breuss, Fritz and Egger, Peter H. and Pfaffermayr, Michael, The Impact of Agenda 2000's Structural Policy Reform on FDI in the EU. Available at SSRN: https://ssrn.com/abstract=576203

Fritz Breuss (Contact Author)

Vienna University of Economics and Bus. Admin., Europe Institute ( email )

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Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment ( email )

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Ludwig-Maximilians University of Munich

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research

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Germany

Michael Pfaffermayr

University of Innsbruck - Department of Economics ( email )

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HOME PAGE: http://homepage.uibk.ac.at/~c43236/

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HOME PAGE: http://www.wifo.ac.at/Michael.Pfaffermayr/

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