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The Euro Impact on Foreign Direct Investment in EMU Countries

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  • Xenia Florentina Radu

    (City University, London)

Abstract

This paper measures the Euro impact on FDI in Economic and Monetary Union countries, an issue of present concern, taking into account the recent trends of this indicator. This relation is tested with Fixed and Random Effects in a gravity model that includes a difference-in-difference estimator, over the period of 1994-2010. It is obtained a negative effect, the Euro decreasing on average inward FDI by 3,389.523 US dollars million in EMU member countries. Moreover, the paper is approaching a Quantile Regression that provides results of the Euro effect on different percentages of the FDI sample. The outcome of this regression shows that the EMU impact is indeed different across various percentiles, even positive for the first 5% of the FDI data.

Suggested Citation

  • Xenia Florentina Radu, 2013. "The Euro Impact on Foreign Direct Investment in EMU Countries," Working Papers 2, Bucharest Academy of Economic Studies, Research Center in International Business and Economics (RCIBE).
    • Handle: RePEc:bus:wpaper:2
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    File URL: http://www.rei.cercetare.ase.ro/WP/Archive/CCREI_2.pdf
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    References listed on IDEAS

    as
    1. Kyriacos Aristotelous & Stilianos Fountas, 2012. "What is the Impact of Currency Unions on FDI Flows? Evidence from Eurozone Countries," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 10(2), pages 87-98.
    2. Estrin, Saul & Bevan, Alan, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers.
    3. José de Sousa & Julie Lochard, 2011. "Does the Single Currency Affect Foreign Direct Investment?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(3), pages 553-578, September.
    4. Alan A. Bevan & Saul Estrin, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," William Davidson Institute Working Papers Series 342, William Davidson Institute at the University of Michigan.
    5. Marián Dinga & Vilma Dingová, 2011. "Currency Union and Investment Flows: Estimating the Euro Effect on FDI," Working Papers IES 2011/25, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2011.
    6. John Elder & Peter E. Kennedy, 2001. "Testing for Unit Roots: What Should Students Be Taught?," The Journal of Economic Education, Taylor & Francis Journals, vol. 32(2), pages 137-146, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Foreign Direct Investment; Euro; Optimum currency area; Quantile regression;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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