Do Deep Trade Agreements Boost Vertical FDI?

Do Deep Trade Agreements Boost Vertical FDI?

An increasing number of preferential trade agreements (PTAs) and the rise of offshore production are distinctive features of the modern world economy. Exploiting the World Trade Organization (WTO) database on the content of deep trade agreements, t...

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Bibliographic Details
Main Authors: Osnago, Alberto, Rocha, Nadia, Ruta, Michele
Format: Journal Article
Language:English
Published: Published by Oxford University Press on behalf of the World Bank 2019
Subjects:
PREFERENTIAL TRADE
PREFERENTIAL TRADE AGREEMENT
FOREIGN DIRECT INVESTMENT
FIRM OWNERSHIP
GLOBAL VALUE CHAIN
TRADE DIVERSION
TRADE POLICY
REGIONAL INTEGRATION
Online Access:http://documents.worldbank.org/curated/en/113601565592438000/Do-Deep-Trade-Agreements-Boost-Vertical-FDI
http://hdl.handle.net/10986/32237
Description
Summary:An increasing number of preferential trade agreements (PTAs) and the rise of offshore production are distinctive features of the modern world economy. Exploiting the World Trade Organization (WTO) database on the content of deep trade agreements, the authors build on the existing literature to investigate whether deep trade agreements between countries are related to vertical foreign direct investment (FDI). Specifically, the authors show that deeper trade agreements increase vertical FDI measured with a proxy constructed in Osnago, Rocha, and Ruta with data on foreign firm ownership and subsidiaries’ revenues available in the ORBIS database.

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