Reform Creating Regional Trade Agreements and Foreign Direct Investment: Applications for East Asia
Year: 2008
Type: article
Abstract: . We estimate the investment creation and diversion effects of RTAs by using an extended gravity equation focusing on domestic reform as a commitment device for RTA membership. As a case study, we estimate the impact of proposed East Asian RTAs on inward FDI. We find that: (i) reform creating RTA membership, larger market size, better skilled labour and lower trade costs all contribute positively and significantly to inward FDI; and (ii) most of the proposed East Asian RTAs promote intra‐bloc FDI. In particular, both South–North and North–North RTAs prove to be more preferable membership combinations to South–South RTAs in East Asia.
Source: Pacific Economic Review
Authors: Innwon Park, Soonchan Park
Institutions: Korea University, Kongju National University
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W1576150480