Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108730
Authors: 
Cherif, Mondher
Dreger, Christian
Year of Publication: 
2015
Series/Report no.: 
DIW Discussion Papers 1461
Abstract: 
The integration of emerging markets into the global economy is heavily promoted by foreign direct investment (FDI) inflows. Within the factors driving the location of FDI, regional trade agreements (RTAs) become increasingly relevant for emerging markets. We explore the impact of South-South trade agreements on FDI by dynamic panel models. The MENA countries are compared to the better performing regions in Latin America and Southeast Asia. Several striking results emerge from the analysis. First, agglomeration effects are weaker for the MENA region. Second, the impact of the RTA is important. However, RTAs do not generally rise the attractiveness of the region for foreign investors, as the effect interacts with business-friendly regulations. Third, financial deepening in the host country is a crucial factor, often again in combination with the institutional framework. Furthermore, institutional conditions may not be relevant per se, but only in terms of its interaction with the macroeconomic determinants.
Subjects: 
MENA Region
foreign investment
South-South trade agreements
JEL: 
F15
F21
F63
E22
Document Type: 
Working Paper

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