Bjorvatn, K. - Norges Handelshøyskole (NHH) - 1999
has been a process of economic integration between countries, bringing down costs of trade. At first sight, the increased … importance of FDI seems paradoxical; we would expect lower trade costs to promote trade rather than direct investment. This paper … demonstrates that a reduction in trade costs may indeed induce firms to choose FDI rather than exports. We also demonstrate that …