Regional integration and the location of FDI

Abstract

How will the creation of the FTAA affect FDI from the rest of the world to the region? What are the implications of FTAA for a country such as Mexico whose preferential access to the US may be diluted? Would the effect be similar across countries, or should we expect to see winners and losers? What determines whether a particular country wins or loses FDI flows as a result of the FTAA? These are some of the issues that we address in the paper. While the prospect of the FTAA is what motivates us to carry out this study, our focus is certainly broader, as we look at the effects of regional integration agreements in general, without concentrating in particular on the FTAA.