Foreign direct investment

European Union

Description

Intra-Community trade - free movement of goods
Commercial policy
Economic policy - Economic and Monetary Union

Informations

• Publié par: EUROPEAN-UNION
• Nombre de lectures: 13
• Langue: English
• Poids de l'ouvrage: 5 Mo

Extrait

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SUBSERIES IV: IMPACT ON TRADE AND
INVESTMENT
Volume 1 The Single ¿Marfcet Review
MPACT ON TRADE AND INVESTMENT
FOREIGN DIRECT
INVESTMENT The Single Market Review series
Subseries I — Impact on manufacturing
Volume: 1 Food, drink and tobacco processing machinery
2 Pharmaceutical products
3 Textiles and clothing
4 Construction site equipment
5 Chemicals
6 Motor vehicles
7 Processed foodstuffs
8 Telecommunications equipment
Impact on services Subseries II —
Volume: Insurance 1
Air transport 2
Credit institutions and banking 3
Distribution 4
Road freight transport 5
Telecommunications: liberalized services 6
Advertising 7
8 Audio-visual services and production
9 Single information market
10 Single energy market
11 Transport networks
III - Dismantling of barriers Subseries
Volume: 1 Technical barriers to trade
Public procurement 2
3 Customs and fiscal formalities at frontiers
4 Industrial property rights
5 Capital market liberalization
6 Currency management costs
Subseries IV Impact on trade and investment
Volume: 1 Foreign direct investment
2 Trade patterns inside the single market
3 Trade creation and trade diversion
4 External access to European markets
Subseries V — Impact on competition and scale effects
Volume: 1 Price competition and price convergence
2 Intangible investments
3 Competition issues
4 Economies of scale
Subseries VI — Aggregate and regional impact
Volume: 1 Regional growth and convergence
2 The cases of Greece, Spain, Ireland and Portugal
3 Trade, labour and capital flows: the less developed regions
4 Employment, trade and labour costs in manufacturing
5 Aggregate results of the single market programme
Results of the business survey EUROPEAN COMMISSION
The Single 31a.rfc.et Review
MPACT ON TRADE AND INVESTMENT
FOREIGN DIRECT
INVESTMENT
The Single /Pfarfcet Review
SUBSERIES IV: VOLUME 1
OFFICE FOR OFFICIAL PUBLICATIONS
OF THE EUROPEAN COMMUNITIES
KOGAN PAGE EARTHSCAN This report is part of a series of 39 studies commissioned from independent consultants in the
context of a major review of the Single Market. The 1996 Single Market Review responds to
a 1992 Council of Ministers Resolution calling on the European Commission to present an
overall analysis of the effectiveness of measures taken in creating the Single Market. This
review, which assesses the progress made in implementing the Single Market Programme,
was coordinated by the Directorate-General 'Internal Market and Financial Services'
(DG XV) and thel 'Economic and Financial Affairs' (DG II) of the
European Commission.
This document was prepared for the European Commission
by
Economists Advisory Group Ltd
It does not, however, express the Commission's official views. Whilst every reasonable effort
has been made to provide accurate information in regard to the subject matter covered, the
Consultants are not responsible for any remaining errors. All recommendations are made by
the Consultants for the purpose of discussion. Neither the Commission nor the Consultants
accept liability for the consequences of actions taken on the basis of the information
contained herein.
The European Commission would like to express thanks to the external experts and
representatives of firms and industry bodies for their contribution to the 1996 Single Market
Review, and to this report in particular.
© European Communities, 1998
No part of this book may be reproduced, stored in a retrieval system, or transmitted in any
form or by any means, electronic, mechanical, photocopying, recording or otherwise without
written permission from the copyright holder.
Office for Official Publications of the European Communities
2 rue Mercier, L-2985 Luxembourg
ISBN 92-827-8796-6 Catalogue number: CI-70-96-001-EN-C
Kogan Page
120 Pentonville Road, London N1 9JN
ISBN 0 7494 2330 7 Tabic of contents
Table of contents
List of tables viii
List of figures x
List of abbreviations xi
Acknowledgements xii
1. Summary 1
1.1. Overview of FDI trends
1.2. Theoretical background
1.3. FDI and trade
1.4.I and geographic concentration 2
1.5. FDI and sectoral distribution
1.6. The SM and levels of intra-EU FDI
1.7.e SM and levels of extra-EU FDI 3
1.8. Corporate responses to the SM
2. Introduction and outline of methodology 5
2.1. Terms of reference
2.2. Data availability and methodology
2.3. The single market programme and the drivers of FDI 7
2.4. An overview of FDI trends in the EU 8
3. Literature review: theories of regional integration, trade and foreign direct
investment 13
3.1. Introduction
3.2. The theory of regional economic integration 14
3.3.e new theories of trade6
3.4. The theory of foreign direct investment9
3.5. Interface between REI theory, trade theory and FDI theory 21
3.6. Intra-and extra-EU FDI 2
3.7. Integrated international production - the quality of FDI
3.8. Modalities of foreign involvement
3.9. Tariff vs non-tariff barriers/Mark I vs Mark II integration
3.10. The location of production within the EU 3 0
4. Likely impacts of the single market on intra-EU FDI flows 35
4.1. Introduction 3
4.2. FDI and trade6
4.3.I and geographic concentration7
4.4. Sectoral composition of FDI8 Foreign direct investment
4.5. The SM and levels of FDI 38
4.6. Other aspects of FDI likely to be influenced by the SM 3
5. The FDI and trade relationship 43
5.1. Introduction
5.2. Empirical investigation4
5.3. Public procurement liberalization: impact on trade and FDI 47
5.4.l testing8
5.5. Conclusion 5
6. FDI and geographic concentration 61
6.1. Introduction
6.2. Empirical investigation
6.2.1. Member State perspective
6.2.2. Sectoral perspective5
6.2.3. Technology and concentration6
6.3. Conclusion 69
7. Sectoral distribution and FDI 7
7.1. Introduction
7.2. Methodology
7.3. Empirical testing 81
7.4. The sectoral distribution of UK outward FDI stock 8
7.5.eln of German outward FDI stock3
7.6. Conclusions4
8. The single market and levels of intra-EU FDI5
8.1. Introduction
8.2. Empirical investigation of intra-EU flows 86
8.3. The impact of the SM on the geographical distribution of UK FDI8
8.4. Thet of the SM on the distribution of German FDI9
9. The single market and levels of extra-EU FDI 93
9.1. Introduction 9
9.2. Japanese FDI in Europe
9.2.1. Internationalization of Japanese companies4
9.2.2. Means and motivation ofe investment in Europe 95
9.2.3. EC Member State perspectives on Japanese investment8
9.2.4. Sectoral perspectives on Japanese FDI into the EC 100
9.2.5. Japanese FDI and high value-added activity in the EC2
9.2.6. Evaluation of the role of the single market in Japanese FDI
9.3. United States FDI into the EC 105
9.3.1. Historical patterns of US FDI into the EC
9.3.2. EC Member State perspectives on US FDI6
9.3.3. Sectoral perspectives on US FDI into the EC7
9.3.4 US FDI and the single market
9.4. Conclusion and comparison of US and Japanese FDI into the EC 109 Table of contents
10. Corporate strategy and the single market 117
10.1. Introduction 11
10.2. The impact of the single market on the strategic behaviour of firms 119
10.3. Business surveys 122
10.3.1. The trade association survey3
10.3.2. The survey of EU businesses4
10.4. The role of M&As7
11. Conclusions 139
11.1. Preface
11.2. Ex post analy ti cal examination 140
11.3. Econometric analysis
11.4. Strategic analysis3
11.5. Summary4
Appendix A: FDI trends in the EU
Appendix B: Econometric methodology 165
B.l. Introduction
B.2. Data sources and approach to empirical study
B.3. The econometric model7
B.3.1. Market size and factor costs
B.3.2. Relative unit labour costs8
B.3.3. Internalization factors 16
B.3.4. Financial conditions9
B.3.5. Currency variability
B.3.6. Barriers to market entry 170
B.3.7. Other factors
B.4. Existing econometric studies1
B.5. Econometric techniques used in this study2
B.5.1. Non-stationarity3
B.5.2. Partial adjustment models4
B.5.3. German FDI5
B.6. Significance of the variables employed6
B.6.1. Significance of other variables
B.6.2. Relative corporate tax rates 177
B.6.3.e market size8
B.7. Results of the regressions 180
B.8.s of investigation into German FDI
B.9. Evaluating the impact of the single market on intra-EU FDI 19
Bibliography 193 Foreign direct investment
List of tables
Table 2.1. Share of FDI inflows (%) from all countries 9
Table 2.2.e of FDI outflows (%) from alls
Table 2.3. Average annual increase in FDI inward stock from all countries (%) 11
Table 2.4.ele in FDI outward stock from alls (%)
Table 2.5. Significance (ratios) of FDI inflows to gross fixed capital formation (GFCF) 12
Table 2.6.e (ratios) of FDI inward stock to GDP 12
Table 3.1. The effects of regional economic integration on FDI 23
Table 3.2.e strategies and structures of