The Research On The Effect Of Investment Provisions Depth In Regional Trade Agreements On FDI Flows

Since the 1990 s,due to the stagnation of the multilateral trade liberalization process with WTO as the core,the number of regional trade agreements(RTAs)has been increasing,and international economic cooperation has entered an era of deep policy cooperation and coordination with RTAs as the hub.On the one hand,the cooperation content of the RTAs has been deepening,and the coverage area has far exceeded the traditional jurisdiction of the WTO.The provisions of the RTAs have extended from the initial liberalization of commodity trade to the policy cooperation areas after the border,such as service trade,investment,competition and capital flow.On the other hand,the vertical specialized production driven by the global value chain and the fragmentation of the global supply chain under the background of antiglobalization struggle with each other,and the international trade and investment rules are facing reconstruction.International investment rules under the framework of RTAs are becoming more and more important,which has a profound impact on promoting FDI in the region and the division in global value chains.What is the impact of investment provisions in RTAs on FDI among member countries? This issue has aroused a lot of attention from scholars in recent years.This paper attempts to explore the impact of investment provisions depth in RTAs and their heterogeneity on FDI in the region,with a view to providing suggestions and opinions on China’s Free Trade Area strategic upgrading and high-level opening-up strategy.First of all,this paper reviews the relevant important theories and literature of regional trade agreements and FDI,clarifies the impact mechanism and theoretical analysis framework of investment provisions in RTAs on FDI flows,and lays the foundation for empirical analysis.Secondly,relying on the World Bank’s deep trade agreement database(DTA)and based on the " provision count index method",the paper expands and constructs the investment provision depth index system,and analyzes the factual characteristics of investment provisions in RTAs and FDI development.Thirdly,based on the FDI outflows from OECD members and other countries from 1990 to 2017,this paper empirically studies the effect of investment provisions depth in RTAs on FDI flows in the region by using the extended gravity model.Finally,combining the heterogeneity of investment provisions of RTAs,the economic level differences of RTAs members and the heterogeneity of FDI,the paper tests the robustness of the empirical research conclusions and explores the impact mechanism.The results show that: First,the depth of investment provisions in RTAs has a significant effect on the promotion of FDI flows between members,but different types of investment provisions depth have significant differences on the promotion of bilateral FDI flows.Among them,the provisions "scope and definition" and "degree of investment liberalization" have the most obvious promotion effect on FDI.Secondly,investment provisions in RTAs also have heterogeneous effects on FDI flows among members with different levels of economic development.Among them,the "SouthNorth" RTAs investment provisions have a significant effect on the promotion of bilateral FDI flows,but the "North-North" RTAs investment provisions have no significant effect on the promotion of bilateral FDI.Thirdly,based on the classification research of initial FDI and income reinvestment FDI,it is found that investment provisions in RTAs have promotion effect on both types of FDI.Among them,the "North-North" RTAs investment provisions have a significant promotion effect on initial FDI,while the impact on income reinvestment FDI is not significant.However,the "South-North" RTAs investment provisions are beneficial to improve the return of reinvestment of FDI,but have no significant promotion effect on initial FDI.Finally,we find that the level of domestic institutional quality in the host country affects the degree of the promotion effect of RTAs investment provisions on FDI flows in the region.