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The effect on foreign direct investment of membership in the European Union

Bruno, Randolph Luca, Ferreira Campos, Nauro and Estrin, Saul ORCID: 0000-0002-3447-8593 (2021) The effect on foreign direct investment of membership in the European Union. Journal of Common Market Studies. ISSN 1747-5244

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Abstract

This paper explores the impact of EU membership on foreign direct investment (FDI). It analyses empirically how the effects of such deep integration differ from other forms and investigates what drives these effects. Using a structural gravity framework on annual bilateral FDI data for almost every country in the world, over 1985-2018, we find EU membership leads FDI into the host economy to be about 60% higher for investment from outside the EU, and around 50% higher for intra-EU FDI. Moreover, we find that the effect of EU membership on FDI is larger than from membership of NAFTA, EFTA, or MERCOSUR, and that the Single Market is the cornerstone of this differential impact.

Item Type: Article
Official URL: https://onlinelibrary.wiley.com/journal/14685965
Additional Information: © 2020 University Association for Contemporary European Studies and John Wiley & Sons Ltd
Divisions: Management
Subjects: H Social Sciences > HG Finance
J Political Science > JN Political institutions (Europe)
Date Deposited: 17 Dec 2020 16:15
Last Modified: 01 Sep 2021 18:06
URI: http://eprints.lse.ac.uk/id/eprint/107939

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