Regional economic integration and foreign direct investment: The case of NAFTA

Abstract and Key ResultsWe examine the impact of NAFTA on FDI into the region and the individual member countries. The literature on FDI and regional economic integration suggests that the implementation of NAFTA makes the entire area a more desirable investment location. However, insofar as individual member countries are concerned, the a priori effects are not necessarily unambiguously positive.We find that the implementation of NAFTA had a generally positive effect on inward FDI into the entire region, with the benefits accruing only to the United States and Canada.