The effect of the euro on foreign direct investment

By Pavlos Petroulas. Social Science Research Network, 2007

166 citations recorded by the source corpus.

In this paper the recent effect of the European Monetary Union on inward FDI-flows is examined. We use a difference-in-differences approach for both a gravity based- as well as a general equilibrium approach. The estimated results show that the introduction of the euro raises inward FDI by 14 to 16 percent within the euro area by 11 to 13 percent from non-member and weakly by 8 percent to non-member countries. Moreover the geographical effects of the euro are explored. The results show partial agglomeration tendencies for the euro area. There are also some indications of increased importance of vertical specialization in the sample.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/fe4054c509432e4e7e59bed2043162f2381dcbe9

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Citations in the corpus

Does the Single Currency Affect Foreign Direct Investment (2011, background): “An additional concern is the use of FDI flows (as in Petroulas, 2007), which present more negative values and are less reliable and persistent through time than stocks.”
Cross-Border Mergers and Acquisitions and European Integration (2009, unknown): “4 Petroulas (2007) estimated the impact of the introduction of the euro on inward FDI flows and finds that the EMU increased FDI flows by approximately 15% within the euro area.”
The Trade and FDI Effects of EMU Enlargement (2008, unknown): “In Petroulas (2007), it is estimated that the EMU increases inward FDI flows by about 16 percent within the euro area.”
Infrastructure Endowment and Corporate Income Taxes as Determinants of Foreign Direct Investment in Central- and Eastern European Countries (2007, unknown): “More recently it has also been successfully applied to explain bilateral FDI flows (e.g. Bevan and Estrin 2004; Petroulas 2007).”
Study on the Impact of the Euro on Trade and Foreign Direct Investment (2008, unknown): “The two main, recent studies using the gravity FDI approach are Petroulas (2007) and Coeurdacier, De Santis and Aviat (2008). Petroulas (2007) uses a panel of unilateral FDI flows (equity and other capital) between 18 developed countries for the years 1992-2001. He finds the euro’s effect on aggrega”
Fiscal Interactions Among European Countries: Does the EU Matter? (2007, unknown): “Other research concentrates on the e¤ect of the EMU on FDI; Petroulas (2007) shows that the introduction of the Euro raised inward FDI by 14 to 16 percent between Eurozone countries, by 11 to 13 percent from member countries to non-members, and by around 8 percent from non-member countries to…”
FDI determination and corporate tax competition in a volatile world (2010, background): “In fact, as shown by Petroulas [44], exchange rate variability discourages international investment.”
European Economic and Monetary Integration, and the Optimum Currency Area Theory (2008, background): “According to Petroulas (2007), the EMU effect – which has been isolated by controlling for GDP and development in stock markets in the acquirer and target countries, being part of EU, as well by controlling for the world investment in EMU, etc. – on FDI flows is estimated to be equal to 7%.”
Robust FDI determinants: Bayesian Model Averaging in the presence of selection bias (2012, unknown): “There is considerable evidence that currency unions affect FDI, although much of the research has focused on Europe only (see e.g., Petroulas, 2007 and Baldwin et al., 2008).”