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Regional Trade Agreements and Foreign Direct Investment

Authors


  • Acknowledgements: The author wishes to thank Gary Goertz, Keiron Bailey, William Dixon, Bradford Jones, Lorenzo Albacete, Marinella Lentis, the three anonymous reviewers, and Politics & Policy's Editor-in-Chief for their comments and support.

Abstract

Regional trade institutions increase the local market size and attract higher foreign direct investment (FDI) inflows. The new economic geography provides the theoretical model for evaluating the spatial distribution of foreign capital within a multistate market. In this article, a fixed-effects cross-sectional time series regression examines 109 states from 1980-2005. The study's findings are that multilateral regional trade institutions are more likely to attract FDI inflows, and the gains in FDI inflows are highest in states with the strongest regional economy.

Las instituciones de comercio regional incrementan el tamaño del mercado local y atraen una cantidad mayor de inversión extranjera directa (IED). La nueva geografía económica provee un modelo teorético para evaluar la distribución física de capital extranjero dentro de un Mercado multinacional. Una regresión de serie temporal examina ciento nueve estados de 1980 a 2005. Instituciones de comercio regional multilaterales tienen más probabilidades de atraer flujos de IED y los estados con una economía regional más fuerte tienen los mayores beneficios por el flujo de IED.

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