The Effect on Foreign Direct Investment of Membership in the European Union

This article explores the impact of EU membership on foreign direct investment (FDI). It analyses empirically how effects such deep integration differ from other forms and investigates what drives these effects. Using a structural gravity framework annual bilateral FDI data for almost every country in world 1985 to 2018, we find leads about 60 per cent higher into host economy outside EU, around 50 intra-EU FDI. Moreover, that effect is larger than North American Free Trade Agreement, European Association Southern Common Market, single market cornerstone this differential impact.