Multilateral Trade Liberalisation and Foreign Direct Investment Inflows. (February 2017)

• Record Type: Journal Article
• Authors: Gnangnon, Sèna Kimm
• Is Part Of: Economic affairs. Volume 37:Number 1(2017)
• Page Start: 66
• Page End: 84
• Publication Date: 2017-02
• Subjects: foreign direct investment -- multilateral trade liberalisation; Great Britain -- Economic policy -- 1945-1964 -- Periodicals; Great Britain -- Economic conditions -- 1945-1964 -- Periodicals; Economics -- Periodicals; 330.9
• DOI: 10.1111/ecaf.12213
• Languages: English
• ISSNs: 0265-0665

Abstract

Abstract: 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.