earticle

영어

Many countries have been involved in Free Trade Agreements (FTAs). These agreements make the trading relationships between those countries much more profitable by lowering barriers to trade between nations. Because of the importance of international trade and investment for promoting wellbeing and economic growth, the relationship between FDI and FTA is crucial to creating economic policies that foster international welfare. This paper models the effect of FTA on FDl, using an endogenous regime switching model. The final analysis is that the existence FTA is an inconsistent determinant of FDI between paired countries. Based on this model, I cannot say if the existence of a FTA is complementary or supplementary to FDl.