Evolution of FDI in the United States in the context of trade liberalization and regionalization

The establishment of trading blocs is a way of increasing discrimination against firms outside the area of integration and, crucially, of raising the preference for local production within the integrating area. We focus first on the theoretical implications on firms' strategies of the increasing move towards regional economic integration (REI) in Europe and North America. Then, we examine the impact regional integration in North America has had on the foreign investment strategies of Canadian, European, and Japanese firms. Our result points to the conclusion that there are differences in the strategic responses between insider and outsider firms to the extent that these follow country of origin. Our findings also demonstrate that these differences can be interpreted within the framework of international business theory.