Estimating regional trade agreement effects on FDI in an interdependent world

Badi H. Baltagi, Peter Egger, Michael Pfaffermayr

Research output: Contribution to journalArticlepeer-review

114 Scopus citations


Recent research on trade and multinationals highlights that multinational firms' integration strategies are complex and the degree of vertical integration varies in a multilateral world with many possible locations of activity. In particular, multinationals control a large fraction of trade within the block of developed countries. The most important regional trade agreements (RTAs) are signed between members of the very same block of economies. This gives rise to the question asked in the present paper: what is the impact of RTAs on FDI in an interdependent world? Recent spatial HAC estimation techniques are applied to both estimation and testing.

Original languageEnglish (US)
Pages (from-to)194-208
Number of pages15
JournalJournal of Econometrics
Issue number1-2
StatePublished - Jul 2008


  • Generalized moments (GM) estimators
  • Multinational firms
  • Regional trade agreements
  • Spatial econometrics

ASJC Scopus subject areas

  • Economics and Econometrics


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