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Foreign Direct Investment Liberalization Between Canada and the USA: A CGE Investigation

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  • Marcel Mérette
  • Evangelia Papadaki
  • Jorge Hernandez
  • Yu Lan

Abstract

In this paper, we develop a computable general equilibrium (CGE) model to shed quantitative light on the implications of a scenario of deeper economic integration between Canada and the United States, where the barriers for foreign direct investment are preferentially eliminated. Our model distinguishes between the activities of domestic and foreign-owned firms at the microeconomic level, both in terms of demand and production characteristics. Overall our findings suggest that further investment liberalization between the two countries will accelerate the shaping of Canada’s industrial structure, as manifested by recent trends. Copyright International Atlantic Economic Society 2008

Suggested Citation

  • Marcel Mérette & Evangelia Papadaki & Jorge Hernandez & Yu Lan, 2008. "Foreign Direct Investment Liberalization Between Canada and the USA: A CGE Investigation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(2), pages 195-209, June.
    • Handle: RePEc:kap:atlecj:v:36:y:2008:i:2:p:195-209
    DOI: 10.1007/s11293-008-9108-z
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    References listed on IDEAS

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    1. Daniel Trefler, 2004. "The Long and Short of the Canada-U. S. Free Trade Agreement," American Economic Review, American Economic Association, vol. 94(4), pages 870-895, September.
    2. Kimberly A. Clausing, 2001. "Trade creation and trade diversion in the Canada – United States Free Trade Agreement," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(3), pages 677-696, August.
    3. John Romalis, 2007. "NAFTA's and CUSFTA's Impact on International Trade," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 416-435, August.
    4. Hiro Lee & Dominique van der Mensbrugghe, 2001. "A General Equilibrium Analysis of the Interplay between Foreign Direct Investment and Trade Adjustments," Discussion Paper Series 119, Research Institute for Economics & Business Administration, Kobe University, revised Jul 2001.
    5. Susan E. Feinberg & Michael P. Keane & Mario F. Bognanno, 1998. "Trade Liberalization and Delocalization: New Evidence from Firm-Level Panel Data," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 749-777, November.
    6. Philippa Dee & Kevin Hanslow, 2013. "Multilateral Liberalization of Services Trade," World Scientific Book Chapters, in: Services Trade Reform Making Sense of It, chapter 4, pages 69-95, World Scientific Publishing Co. Pte. Ltd..
    7. Unknown, 2001. "General Discussion," Proceedings of the 6th Agricultural and Food Policy Systems Information Workshop, 2000: Trade Liberalization Under NAFTA: Report Card on Agriculture 16839, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    8. Steven Globerman & Daniel M Shapiro, 1999. "The Impact of Government Policies on Foreign Direct Investment: The Canadian Experience," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(3), pages 513-532, September.
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    Cited by:

    1. Kawai, Masahiro & Zhai, Fan, 2009. "China-Japan-United States integration amid global rebalancing: A computable general equilibrium analysis," Journal of Asian Economics, Elsevier, vol. 20(6), pages 688-699, November.

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    More about this item

    Keywords

    FDI; Free trade; Canada–USA; CGE; F10; O50;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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