Falvey, Rodney

Gounder, Aruna

Rajaguru, Gulasekaran

English

In this paper we add to a relatively small literature on FDI in the ACP group by focusing on the role of PTAs in attracting FDI. Our empirical analysis utilises panel data on bilateral FDI stocks from 34 OECD countries into 45 ACP countries over the period 2000-2012. This bilateral specification allows us to control for country pair policy variables such as the presence of a PTA, a double tax treaty or a bilateral investment treaty between the OECD source and ACP host country, along with other important explanatory variables identified in the literature. We conclude the prevalence of market seeking FDI in the ACP group, with an important role for regional integration in providing access to surrounding market potential. We find that in the Caribbean a PTA, with or without investment provisions, has no significant effect on FDI, regardless of whether a BIT is in place. In Africa, however, we find that a bilateral PTA with investment provisions, with or without a BIT, reduces FDI; and a bilateral PTA without investment provisions does the same, unless a bilateral BIT is in place, in which case FDI increases

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The effect of preferential trading arrangements on foreign direct investment activity:Empirical evidence from the African, Caribbean and Pacific group

https://pure.bond.edu.au/ws/files/27198796/The_effect_of_preferential_trading_arrangements_on_foreign_direct_investment_activity.pdf

The effect of preferential trading arrangements on foreign direct investment activity:Empirical evidence from the African, Caribbean and Pacific group

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