Business, Management and Accounting
4 years ago

Regional integration boosts foreign investment by 27%, benefiting open countries.

1 view
RePEc: Research Papers in Economics
Regional Integration and the Location of FDI
Eduardo Levy Yeyati, Christian Daude, Ernesto Stein

Paper Summary

Regional integration agreements (RIAs) increase foreign direct investment (FDI) by 27% from source countries. Countries benefit more if they are open and have different factor proportions. Market size growth due to integration attracts more FDI, but only countries with attractive FDI environments benefit. Some FDI may be diverted. Overall, regional integration attracts FDI, but benefits are not evenly distributed.

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