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| Author: | Motta, M. Norman, G. |
| Title: | Does economic integration cause foreign direct investment? |
| Journal: | International Economic Review
1996 : NOV, VOL. 37:4, p. 757-784 |
| Index terms: | FOREIGN INVESTMENT ECONOMIC INTEGRATION ECONOMICS |
| Language: | eng |
| Abstract: | The authors analyze the effect of economic integration on oligopolists' international trade and foreign direct investment activities, using a three-country, three-firm model. Increased country size leads to dispersed FDI, while improved market accessibility leads to export-platform fdi. Increased intra-regional market accessibility prompts outside firms to invest in the regional bloc, reducing product prices, profits of intra-bloc firms, and increasing total surplus. Integrating economies are more likely to gain from improving intra-regional market accessibility than from tougher external trade policy. |
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