Non-trade provisions in trade agreements and FDI

Di Ubaldo, Mattia and Gasiorek, Michael (2022) Non-trade provisions in trade agreements and FDI. European Journal of Political Economy. a102208. ISSN 0176-2680

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Preferential trade agreements (PTAs) increasingly feature a variety of provisions related to economic and social rights (ESR), environmental protection (EP), and civil and political rights (CPR). In this paper we estimate the effect of the degree of legalization of PTAs in these non-trade provisions on the flow of bilateral greenfield FDI. We explore this relation in a structural gravity setting and find that all three types of non-trade provisions affect the flow of FDI negatively. This effect is driven by investments directed to middle- and low-income countries, in particular for more directly economically relevant (ESR and EP) provisions. These latter are also found to have a larger negative impact on FDI between origin-destination country-pairs which differ the most in their commitment on non-trade issues in PTAs with third parties.

Item Type: Article
Schools and Departments: University of Sussex Business School > Economics
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 03 Mar 2022 08:10
Last Modified: 11 Apr 2022 15:00

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