Medvedev, Denis2012-06-222012-06-222006-11https://hdl.handle.net/10986/8868The author investigates the effects of preferential trade agreements (PTAs) on the net foreign direct investment (FDI) inflows of member countries using a comprehensive database of PTAs in a panel setting. He finds that PTA membership is associated with a positive change in net FDI inflows, and the FDI gains are increasing in the market size of the PTA partners and their proximity to the host country. The author identifies several different channels through which preferential trade liberalization may affect FDI, and confirms that both threshold effects (signing the agreement) and market size effects (joining a larger and faster-growing common market) are important determinants of net FDI inflows, although the latter seem to dominate. The estimated relationship is largely driven by North-South PTAs, and is most pronounced in the late 1990s and early 2000s, the period when the majority of "deep integration" PTAs had been advanced.en-USCC BY 3.0 IGOACCESSION AGREEMENTSACCESSION COUNTRIESAGGREGATE TRADEAVERAGE TARIFFAVERAGE TARIFF RATESAVERAGE TARIFFSBILATERAL INVESTMENTBUDGET CONSTRAINTSCAPITAL FLOWSCHANGES IN TRADECOMMON MARKETCOMPETITION DISCIPLINESCOMPETITION POLICYCOMPETITION RULESCOMPETITIVE PRESSURESCROSS-BORDER FINANCIAL FLOWSCROSS-COUNTRY ANALYSESCROSS-COUNTRY REGRESSIONSCUSTOMSCUSTOMS UNIONDEVELOPING NATIONSDIRECT INVESTMENT INFLOWSDISPUTE SETTLEMENTDISPUTE SETTLEMENT MECHANISMSDOMESTIC FIRMSECONOMIC GROWTHECONOMIC INTEGRATIONECONOMIES OF SCALEELASTICITYELIMINATING TARIFFSEXCHANGE RATEEXPORTERSEXPORTSEXTENDED MARKETEXTERNAL PROTECTIONEXTERNAL TARIFFFDIFINANCIAL MARKETSFINANCIAL SERVICESFIRM SIZEFOREIGN COUNTRYFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN MARKETSFOREIGN OWNERSHIPFOREIGN OWNERSHIP RESTRICTIONSFOREIGN SUBSIDIARIESFREE TRADEFREE TRADE AGREEMENTFREE TRADE AGREEMENTSFREE TRADE AREAGDPGENERAL EQUILIBRIUM MODELGEOGRAPHIC PROXIMITYGLOBAL FREE TRADEGLOBAL LEVELGRANGER CAUSALITYGRAVITY MODELGROWTH POTENTIALGROWTH RATEGROWTH RATESHARMONIZATIONHOST COUNTRIESHOST COUNTRYHOST ECONOMYIMPORTED GOODSINCOMEINCOME LEVELSINDUSTRIALIZATIONINDUSTRIALIZED COUNTRIESINDUSTRY TRADEINTELLECTUAL PROPERTYINTELLECTUAL PROPERTY RIGHTSINTERNAL MARKETINTERNATIONAL CAPITALINTERNATIONAL TRADEINVESTMENT CLIMATEINVESTMENT CREATIONINVESTMENT FLOWSINVESTMENT INFLOWSINVESTMENT LIBERALIZATIONINVESTMENT PROVISIONSINVESTOR CONFIDENCELIBERALIZATION COMMITMENTSLOCAL CONTENTMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMARGINAL EFFECTMARKET ACCESSMARKET POWERMARKET SIZEMARKET SIZE EFFECTSMEMBER COUNTRIESMERCHANDISE TRADEMERGERSMFN TARIFFSMIDDLE EASTERNMNEMNESMULTINATIONAL ENTERPRISESMUTUAL RECOGNITIONMUTUAL RECOGNITION OF STANDARDSNATIONAL MARKETSNATIONAL TREATMENTNEIGHBORING COUNTRIESNON-TARIFF BARRIERSOPEN ECONOMIESOPENNESSPOLICY REFORMSPOLICY RESEARCHPOLITICAL RISKPREFERENTIAL ACCESSPREFERENTIAL AGREEMENTPREFERENTIAL AGREEMENTSPREFERENTIAL LIBERALIZATIONPREFERENTIAL TRADEPREFERENTIAL TRADE AGREEMENTSPREFERENTIAL TRADE LIBERALIZATIONPRODUCTION PROCESSPRODUCTION STRUCTUREREDUCTION OF BARRIERSREGIONAL AGREEMENTSREGIONAL INTEGRATIONREGIONAL TRADEREGIONAL TRADE AGREEMENTSREGIONALISMRULES OF ORIGINSCALE ECONOMIESSHALLOW INTEGRATIONTARIFF BARRIERSTARIFF LEVELSTARIFF LINESTARIFF RATESTECHNOLOGY SPILLOVERSTELECOMMUNICATIONSTRADE AGREEMENTTRADE BALANCETRADE BARRIERSTRADE CREATINGTRADE CREATIONTRADE DIVERSIONTRADE FLOWSTRADE INTENSITYTRADE MORETRADE OPENNESSTRADE POLICYTRADE POLICY VARIABLESTRADE THEORYTRADE VOLUMESTRADING PARTNERSUNILATERAL LIBERALIZATIONWORLD TRADEWorld Bank10.1596/1813-9450-4065