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

Arbeitspapier

We quantify the relationships between deep trade liberalization and foreign direct investment (FDI). To this end, we focus on the effects of Deep Trade Agreements (DTAs), and we rely on a structural framework that simultaneously enables us to (i) estimate the direct impact of DTAs on FDI, (ii) translate the partial DTA estimates into general equilibrium effects on FDI; and (iii) obtain partial DTA effects on trade and quantify the impact of DTAs on FDI through trade. We obtain sizable, positive, and statistically significant estimates of the effects of DTAs on both trade and FDI. A counterfactual analysis suggests that, in combination through direct and indirect channels, DTAs have contributed to a large but very asymmetric increase in inward vs. outward FDI.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9985

Classification and Topics

• Classification: Wirtschaft ; Trade: General ; Economic Growth of Open Economies ; Economic Growth and Aggregate Productivity: General
• Subject: foreign direct investment (FDI) ; trade liberalization ; deep trade agreements

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Larch, Mario ; Yotov, Yoto V.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/266020
• Last update: 10.03.2025, 11:42 AM CET