Formation of Regional Trade Block on the Flow of Foreign Direct Investment; Empirical Study

Author(s)

Philip Agyei PEPRAH , Yao HONGXING , Geraude Fortune M. KOUNDE ,

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Volume 8 - April 2019 (04)

Abstract

The aim of this study was to investigate the formation of regional trade blocs on the flow of foreign direct investment. There are many empirical types of research that have already investigated the Free Trade Area (FTA) and Preferential Trade Agreement (PTA). Few researchers have however investigated on the regional trade block formation between trade members and the flow of FDI. This study discussed the important regional trade blocs between ASEAN+3 and Europe Union and after that explored the impact of regional trade blocs on the flow of foreign direct investment in these blocs. The panel data method and FDI gravity model was used on the country members of ASEAN+3 and Europe from the 2005 to 2018. The output of the study revealed the formation of regional trade bloc has a positive and significant impact on the flows of foreign direct investment

Keywords

Regional Trade Blocs, Foreign Direct Investment, Gravity Model

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