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The effect of restrictive measures on cross-border investment in the European Union

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Abstract

This study sheds light on the effect of restrictive policies, such as screening mechanisms, on mergers and acquisitions (M&A) flows into EU Member States in the period 2011-2018, by implementing an augmented gravity model. The results show that different restrictive measures affect cross-border investments unequally, and that the presence of screening mechanisms per se does not negatively affect cross-border investments. When we perform the analysis by sector, results suggest that cross-border investments in manufacturing and non-financial services are negatively influenced by restrictive measures, such as restrictions on foreign personnel being employed in key positions, or restriction on the establishment of branches, land acquisition or profit and capital repatriations.

Suggested Citation

  • Gregori, Wildmer & Nardo, Michela, 2019. "The effect of restrictive measures on cross-border investment in the European Union," JRC Working Papers in Economics and Finance 2019-15, Joint Research Centre, European Commission.
    • Handle: RePEc:jrs:wpaper:201915
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    File URL: https://publications.jrc.ec.europa.eu/repository/bitstream/JRC119285/jrc119285_ma_in_eu_jrcwp.pdf
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    Cited by:

    1. MARSCHINSKI Robert & DE AMORES HERNANDEZ Antonio & AMOROSO Sara & BAUER Peter & CARDANI Roberta & CSEFALVAY Zoltan & GENTY Aurelien & GKOTSIS Petros & GREGORI Wildmer & GRASSANO Nicola & HERNANDEZ GUE, 2021. "EU competitiveness: recent trends, drivers, and links to economic policy: A Synthesis Report," JRC Research Reports JRC123232, Joint Research Centre.

    More about this item

    Keywords

    cross-border investment; M&A; EU; FDI; statutory restrictions; gravity model;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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