How Regional Trade Agreements Affect Bilateral Foreign Direct Investment——From the Perspective of Rule Influence
From the late 20th century,participation in regional trade agreements(RTAs)has become widespread among countries.However,the distribution of bargaining power derived from these agreements is uneven among member coun-tries.This study aims to assess these disparities and their impact on bilateral foreign direct investment(FDI).Drawing on the theory of contract incompleteness,this paper incorporates RTAs and rule power into the analytical frame-work of firms'cross-border production decision-making.It elucidates how varying rule power among members can influence the behavior of multinational enterprises and,consequently,FDI.Utilizing the Texts of Trade Agreements(TOTA),a machine-readable trade agreement text corpus,this paper constructs an asymmetric bilateral rule power indicator through tex-tual analysis to empirically examine the effects of RTAs on bilateral FDI.Poisson pseudo maximum likelihood(PPML)is the main estimation method,with Negative Binomial Pseudo Maximum Likelihood(NBPML)and OLS methods as alternatives.The findings indicate that parties with greater rule power in RTAs(rule-makers)experience significantly higher FDI in partner countries as their rule power increases.This conclusion remains robust after conducting several sensitivity analyses.Further examination reveals that rule-makers in regional trade agreements primarily enhance their foreign direct investment in rule-taker countries by harmonizing regulations and enhancing the overall investment climate of the rule-takers.The results of the heterogeneity analysis suggest that agreements that are longer,contain more provisions and have dispute settlement mecha-nisms are more effective.In terms of the areas of provisions included,agreements with provisions in the investment area are more conducive for rule-making countries to capitalize on their strengths.These findings provide empirical evidence and policy insights for China's proactive engagement in high-level regional trade agreements.Recommendations include actively signing such agreements and regulation improvements,accelerating the formation of model rules aligned with national interests,and enhancing the right to make rules.Furthermore,there should be ex-pedited establishment of mechanisms for coordination and interaction between business entities and government departments during RTA negotiations.
Regional Trade AgreementBilateral Foreign Direct InvestmentRule PowerText-As-Data
NETL
NSTL
万方数据
