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Regional Integration and Foreign Direct Investment in Developing Countries

Research reports

Written by Dirk Willem te Velde

The empirical literature offers little guidance on whether some regions are more successful in attracting FDI than others. We bring together two differing approaches (detailed descriptions of regions and studies estimating effects econometrically based on 0/1 dummies) and estimate a model explaining the real stock of UK and US FDI in developing countries, covering 68 (UK) and 97 (US) developing countries over 1980-2001 and identify the effects of specific regional investment-related provisions on FDI. We show that i) membership of a region leads to further extra regional FDI inflows, but the type of regional provisions matters; ii) that the position of countries within a region matters

Dirk Willem te Velde and Dirk Bezemer