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Economic integration, border costs and FDI location: Evidence from the fifth European Union enlargement

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  • Jones, Jonathan
  • Serwicka, Ilona
  • Wren, Colin
Abstract
Little is known about the effect of border costs on FDI location. This paper explores this for the fifth European Union (EU) enlargement that integrated the ten Central and Eastern European countries (CEECs). It regresses count data for 35,105 FDI projects locating in 25 European countries over the period 1997–2010. Four EU accession events are examined for the more- and less-liberalized CEECs. It finds that the lower border costs doubled FDI in the CEECs at EU membership, of which 60% is diverted from the ‘old’ Europe. This membership effect is three-times greater for the more-liberalized countries, for which earlier accession events are unimportant.

Suggested Citation

  • Jones, Jonathan & Serwicka, Ilona & Wren, Colin, 2018. "Economic integration, border costs and FDI location: Evidence from the fifth European Union enlargement," International Review of Economics & Finance, Elsevier, vol. 54(C), pages 193-205.
    • Handle: RePEc:eee:reveco:v:54:y:2018:i:c:p:193-205
    DOI: 10.1016/j.iref.2017.08.007
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    Cited by:

    1. Ito, Banri, 2020. "Cross-border mergers and acquisitions and inter-urban gravity," MPRA Paper 103985, University Library of Munich, Germany.
    2. Ștefan Cristian Gherghina & Liliana Nicoleta Simionescu & Oana Simona Hudea, 2019. "Exploring Foreign Direct Investment–Economic Growth Nexus—Empirical Evidence from Central and Eastern European Countries," Sustainability, MDPI, vol. 11(19), pages 1-33, September.
    3. Jonathan Jones & Ilona Serwicka & Colin Wren, 2020. "Motives for foreign direct investment location in Europe and EU enlargement," Environment and Planning A, , vol. 52(8), pages 1681-1699, November.
    4. Zhao, Hong & Li, Yiying & Wang, Zengtao & Zhao, Runnan, 2024. "Trade liberalization, regional trade openness degree, and foreign direct investment:Evidence from China," Emerging Markets Review, Elsevier, vol. 59(C).
    5. Vermeulen, Wessel N., 2022. "Stuck outside the single market; Evidence from firms in central and eastern Europe," Journal of Comparative Economics, Elsevier, vol. 50(2), pages 415-434.

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    More about this item

    Keywords

    FDI location; Border costs; Economic integration; European enlargement; Central and Eastern European Countries;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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