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The effects of trade integration and outward foreign direct investment: a regional and industry-level empirical investigation

Sotiriou, Alexandra (2019) The effects of trade integration and outward foreign direct investment: a regional and industry-level empirical investigation. PhD thesis, London School of Economics and Political Science.

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The global economic system has undergone fundamental changes in the last two decades due to the proliferation of free trade agreements, the deepening of the European Union (EU) integration process and increased foreign direct investments (FDI) altering the economic landscape across and within countries. This thesis aims to improve our understanding of the effects of trade and outward FDI across three dimensions. By examining the effects on the domestic industry, and by detecting the regional footprint in terms of growth and the skill composition of labour markets, the empirical findings offer a multi-faceted and multi-level analysis with evidence from South America and the EU. This thesis is structured into an introductory chapter and three analytical papers. The first paper explores the effects of import competition on the manufacturing sector in Chile following the implementation of the country’s two most important Free Trade Agreements with the USA and China. The findings reveal that increased import penetration from China and USA has highly heterogeneous effects with Chinese trade creating more pronounced substitution effects for the domestic industry than trade with USA. The analysis sheds new light on the importance of foreign investment and export intensity – in reversing the negative import substitution effect - due to the opportunities offered from the participation in Global Value Chains. The second paper examines the link between trade and economic growth across the regional income distribution in Greece, during the period after the country joined the European Monetary Union (EMU) incorporating the global economic crisis period. The aim of the analysis is to identify heterogeneous trade effects across the regional income hierarchy. Among the original contributions of this study is that contrary to the prevailing view, EU trade appears negative for the more economically advanced regions and has insignificant effects on lower income regions; while global trade and EU trade differ significantly in their respective growth returns across the income distribution. Finally, the third paper empirically investigates the association between increased outward foreign direct investment (OFDI) and the evolution of the occupational composition at the regional level for Greece, a small peripheral EU economy. The emergence of Greece as an international investor in the Balkan region constitutes an interesting setting of a peripheral EU country investing in peripheral new EU member states and reveals the strong spatial footprint on the occupational structure of home regions, offering valuable policy implications for countries in pre-EU accession phases.

Item Type: Thesis (PhD)
Additional Information: © 2019 Alexandra Sotiriou
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Sets: Departments > Geography and Environment
Supervisor: Rodríguez-Pose, Andrés and Iammarino, Simona

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