Essays in International Economics and Industrial Organization

by Galgau, Olivia O.M.

Abstract (Summary)
The aim of the thesis is to further explore the relationship between economic integration and firm mobility and investment, both from an empirical and a theoretical perspective, with the objective of drawing conclusions on how government policy can be used to strengthen the positive impact of integration on investment, which is crucial in moving and maintaining countries at the forefront of the technology frontier and accelerating economic growth in a world of rapid technical change and high mobility of ideas, goods, services, capital and labor. The first chapter aims to bring together the literature on economic integration, firm mobility and investment. It contains two sections: one dedicated to the literature on FDI and the second covering the literature on firm entry and exit, economic performance and economic and business regulation. In the second chapter I examine the relationship between the Single Market and FDI both in an intra-EU context and from outside the EU. The empirical results show that the impact of the Single Market on FDI differs substantially from one country to another. This finding may be due to the functioning of institutions. The third chapter studies the relationship between the level of external trade protection put into place by a Regional Integration Agreement(RIA)and the option of a firm from outside the RIA block to serve the RIA market through FDI rather than exports. I find that the level of external trade protection put in place by the RIA depends on the RIA country's capacity to benefit from FDI spillovers, the magnitude of set-up costs of building a plant in the RIA and on the amount of external trade protection erected by the country from outside the reigonal block with respect to the RIA. The fourth chapter studies how the firm entry and exit process is affected by product market reforms and regulations and impact macroeconomic performance. The results show that an increase in deregulation will lead to a rise in firm entry and exit. This in turn will especially affect macroeconomic performance as measured by output growth and labor productivity growth. The analysis done at the sector level shows that results can differ substantially across industries, which implies that deregulation policies should be conducted at the sector level, rather than at the global macroeconomic level.
Bibliographical Information:

Advisor:Greunz, Lydia; Cincera, Michele; Gassner, Marjorie; Sekkat, Khalid; Bénassy-Quéré, Agnès; Beine, Michel

School:Université libre de Bruxelles

School Location:Belgium

Source Type:Master's Thesis

Keywords:productivity firm entry and exit regional integration agreement fdi single market


Date of Publication:11/10/2006

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