The Distribution of Foreign Investment and Regional Policy
Review of Regional Research, Forthcoming
8 Pages Posted: 11 Jun 2005
Abstract
In this note economic integration is viewed as a situation where countries within a union coordinate their industrial policies. We demonstrate that greater regional policy coordination between countries may induce more specialization instead of the intended diversification in interregional allocations of foreign investment. Thus international capital flows tend to become more concentrated in an integrated economy. This is in contrast to the objectives of regional policy of the European union.
Keywords: Economic integration, foreign investment, regional policy, specialization, diversification
JEL Classification: F15
Suggested Citation: Suggested Citation
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