Study On The Effect Of Regional Trade Agreement's On Foreign Direct Investment

Since the last 10 years of last 20th century,a new wave of regional trade agreements has been launched around the world,and developing countries have taken an active part in it.Open Regionalism become the core characteristic of international economic cooperation;at the same time,development of international direct investment grows up quickly.The developments of regional trade agreements and international direct investment are on the same page,international direct investment concentrates greatly at the regional level,the relationship between regional trade agreement and international direct investment has catched eyeballs of many scholars.However,in the quantitative research,most scholars regard it as a "black box",using the dummyin the econometric model.However,there are significant differences between the regional trade agreements,and the neglect of these differences often brings conflicting results to the research,especially the quantitative research.Therefore,it is necessary to further penetrate the "black box" of the agreement,to refine the generality of the terms,to consider the macro issues on the basis of the provisions,and to establish a micro basis for macro analysis.Based on the former researches on“nvestment related trade rules”of regional trade agreements will be divided into four types:WTO+,WTO-X,WTO+ LE,WTO-X LE,and discussed the relationship of heterogeneity of the trade agreements on the international direct investment.Generally,this paper has aimed at the region from the perspective of international direct investment development status,developments of regional trade agreement from the heterogeneous perspective,the influence mechanism of specific clause to the international direct investment and the empirical analysis of heterogeneous RTA to the international direct investment.From this paper,it will be concluded as followed:(1)The characteristic of regional concentration of foreign direct investment is obvious.International direct investment is mainly concentrated in North America,the European Union,East/Southeast Asia.The share of capital inflow into and outflow from the "triangle" region accounts for 3/4 of the world total.At present,the inner structure of foreign direct investment changed from energy resources and manufacturing to service industry,which put forward higher requirements for the host country's own chances of development and political environment;the skewness and kurtosis of the investments are on the rise,projects of high value are more prominent and well-known.Good system environment and the business environment are crucial for the international investment.(2)The coverage of WTO+ clauses in the regional trade agreement is higher than that of WTO+ LE,the latter is higher than the WTO-X and the WTO-X LE is the smallest,which shows the acceptable order of the specific clause in the negotiations of RTA.The coverage rate of RTA and the total number of WTO+/WTO-X/WTO+ LE/WTO-X LE varies synchronously.which showed the more RTAs concluded by the contries.the more probability for them to conclude higher standard clauses in the RTA.The share of WTO+ clauses has a positive relationship with that of WTO-X clauses,which means that if a country accepted more WTO+ clauses,it will accept more WTO-X type clauses.Similarily there is a positive relationship between the share of WTO+ LE clauses and the share of WTO-X LE clauses.(3)The measures on the border promote the development of trade,resulting in a certain degree of investment substitution effect;measures behind the border have a direct effect on international direct investment.(4)The number of regional trade agreements particulatly affects the foreign direct investment in a "inverted U shape",too many RTAs signed by a country will have a negative impact on the foreign direct investment.In the initial phrase of signing and enforing RTA,it will promote two-way direct investments.With the growth of the number of RTA,the first-order derivative of cross-border investment value decrined.Besides that,the effects of regional trade agreements on the two-way cross-border investment are not symmetrical.When a country signed not many RTAs,the promotion effect of ODI outflow is higher than that of FDI inflows.However,as the number of RTA increases,the growth rate of ODI flows and FDI flows decreases,and the latter decreases more slowly.(5)The heterogeneity of regional trade agreement,namely the different number of WTO+,WTO-X,WTO+ LE and WTO-X LE clauses has a particular effect on the cross-border investment,which also showed a significant inverted "U" curve.The numbers of WTO+ LE and WTO-X LE clauses have the greatest impact on the inflow of FDI,and the numbers of WTO+ and WTO-X clauses promote the outflow of ODI on the larger extent.(6)The heterogeneity of WTO+ and WTO+ type LE clauses of the RTAs has particular effects on the bilateral cross-border international direct investment,on the U shape.The heterogeneity of WTO-X clauses has particular effects on the bilateral cross-border international direct investment,on the "inverted U" shape.(7)Measures on the border,like the industrial products and agricultural products tax cuts,tax cuts,customs procedures,anti-dumping,anti subsidy,public subsidies and the ect.,have particular negative effects on the cross-border investment.Measures behind the border,like the borders of the state-owned enterprises,TRIMs,service trade,tax rules,capital mobility,investment rules and the ect.,have particular positive effects on the cross-border investment.(8)The heterogeneities of the number of WTO+,WTO+ LE and WTO-X LE clauses,have particular linear effect on the cross-border investment.on the enterprises' investment data.While,the heterogeneity of the number of WTO-X LE clauses,has particular non-linear effect on the cross-border investment.On the abovementioned text,this thesis also provides the following policy recommendations:(1)It is necessary to form a correct understanding the change of governance system of international trade,to seize the key opportunities,and also to givc full play to the role of RTA.To form consensus on the common rules and acceptance of common standards,is necessary to realize the aim of "competitive liberalization".That will be helpful to promote WTO and contribute to the global governance.(2)It is necessary to further conduct the research on the current RTA clauses,which will be helpful for understanding of the specific clause on the economic activities,and be useful for policy makers picking up clauses under the policy development goals.The research will be helpful for the public to understand why a country needs RTAs.and what kind of RTA clauses will promote which economic activities.(3)It is necessary to actively expand the "circle of friends" by signing RTAs,to promote the benefits of RTAs to the other countires and to achive the spillover effects.(4)The conclusion of regional trade agreements should be more cautiouson the choice of the clauses,paying more attention on the timing.Meanwhile,a country should do more to change its business environment,to adapt to the higher standard of RTAs in thefuture.