The Effects of Preferential Trade Agreements on Foreign Direct Investment: Evidence from the African Caribbean Pacific Region

Aruna Gounder, Rodney Falvey, Gulasekaran Rajaguru

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Abstract

Our empirical analysis utilises panel data on bilateral FDI stocks from 34 OECD countries into 45 ACP countries over the period 2000–2017 to consider the role of PTAs in attracting FDI. We control for policies relating to trade, taxes and investment, along with other explanatory variables identified in the literature. We conclude the prevalence of market seeking FDI in the ACP region, with a role for regional integration in accessing surrounding market potential. We find no significant effect of PTAs on FDI in the Caribbean, while in Africa, the effects depend on the presence of a bilateral BIT.
Original languageEnglish
Number of pages23
JournalOpen Economies Review
Volume30
Issue number4
Early online date14 May 2019
DOIs
Publication statusPublished - Sep 2019

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