Abstract:
This paper analyses the effects of Agenda 2000's policy reform on the stocks of outward FDI to the European Union member countries. In a three-factors proximity-concentration New Trade Theory model we indentify the channels of influence on the FDI decision. In the empirical part, we estimate a dynamic panel data model and find that structural expenditures exert a significant positive impact on real stocks of outward FDI to EU countries. We simulate the Agenda 2000 program and obtain short-term and long-term effects of the EU country-specific changes in structural budgets on FDI to these countries.
