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Multilateral Trade Liberalisation and Foreign Direct Investment Inflows
Author(s) -
Gnang Sèna Kimm
Publication year - 2017
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/ecaf.12213
Subject(s) - liberalization , foreign direct investment , international economics , context (archaeology) , economics , international trade , panel data , commercial policy , investment (military) , macroeconomics , market economy , politics , political science , geography , archaeology , law , econometrics
This paper investigates two questions: how does multilateral trade liberalisation affect inward foreign direct investment, and does this impact (if any) depend on the domestic trade policy? The analysis uses a panel data set comprising 171 countries spanning the period 1995–2012. Results indicate that multilateral trade policy liberalisation is conducive to higher FDI inflows in host countries. Furthermore, our evidence suggests that domestic trade policy almost always positively drives inward FDI in a context of multilateral trade policy liberalisation. Countries which initially have the most restrictive trade policy regimes appear to be the greatest beneficiaries of FDI inflows when they liberalise their trade policy in the context of multilateral trade liberalisation.