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Deep Trade Agreements and FDI in Partial and General Equilibrium: A Structural Estimation Framework
Journal article   Open access   Peer reviewed

Deep Trade Agreements and FDI in Partial and General Equilibrium: A Structural Estimation Framework

Mario Larch and Yoto V Yotov
The World Bank economic review, v 39(2), pp 281-307
25 Nov 2024
url
https://doi.org/10.1093/wber/lhae031View
Published, Version of Record (VoR) Open

Abstract

foreign direct investment (FDI) trade liberalization deep trade agreements
This paper quantifies the relationships between deep trade agreements and foreign direct investment (FDI). The analysis relies on a structural framework that simultaneously enables (a) estimating the direct impact of deep trade agreements on FDI, (b) translating the partial deep trade agreement estimates into general equilibrium effects on FDI, and (c) obtaining partial deep trade agreement effects on trade and quantifying the impact of deep trade agreements on FDI through trade. The effects of deep trade agreements on both trade and FDI are sizeable, positive, and statistically significant. A counterfactual analysis suggests that together with direct and indirect channels deep trade agreements have contributed to a large but asymmetric increase in inward versus outward FDI.

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UN Sustainable Development Goals (SDGs)

This publication has contributed to the advancement of the following goals:

#8 Decent Work and Economic Growth
#17 Partnerships for the Goals

Source: SDGs in the Output

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Collaboration types
Domestic collaboration
International collaboration
Web of Science research areas
Business, Finance
Development Studies
Economics
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