|**Cont**|**ents**||
|---|---|---|
|**1**<br>**Intr**|**oduction**|**1**|
|**2**<br>**The**|**theory of preferential liberalization and FDI**|**2**|
|2.1|PTA investment provisions<br>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>2|
|2.2|Investment climate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>4|
|2.3|FDI and trade<br>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>6|
|2.4|FDI and market size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>7|
|2.5|FDI and growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>8|
|2.6|Summary<br>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>10|
|**3**<br>**Em**|**pirical evidence on the efects of PTAs on FDI**|**10**|
|**4**<br>**Mo**|**del setup and estimation results**|**14**|
|4.1|Replication of previous studies<br>. . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>15|
|4.2|Baseline model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>26|
|4.3|Model extensions: alternative specifcations of the PTA variable . . . . . . . . . . .|.<br>31|
|4.4|Decomposition by income level and time period . . . . . . . . . . . . . . . . . . . .|.<br>38|
|**5**<br>**Con**|**clusion**|**42**|
|**A Dat**|**a details**|**45**|
|A.1|List of sample countries<br>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>45|
|A.2|Data sources<br>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>45|
|A.3|Data transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>46|
|**B Add**|**itional estimation results**|**53**|
|B.1|Specifcation tests of the replication model . . . . . . . . . . . . . . . . . . . . . . .|.<br>53|
|B.2|Multicollinearity tests<br>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>54|
|B.3|Granger causality tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>54|
|B.4|Specifcation tests of the baseline model . . . . . . . . . . . . . . . . . . . . . . . .|.<br>55|
|B.5|Decomposing model results by geographic region and income level<br>. . . . . . . . .|.<br>57|
|**List o**|**f Tables**||
|1|“Deep integration” provisions of various PTAs<br>. . . . . . . . . . . . . . . . . . . .|.<br>3|
|2|Potential efects of preferential trade liberalization on FDI . . . . . . . . . . . . . .|.<br>10|
|3|Fixed efects estimation results: net FDI infows<br>. . . . . . . . . . . . . . . . . . .|.<br>22|
|4|FGLS estimation results: net FDI infows<br>. . . . . . . . . . . . . . . . . . . . . . .|.<br>28|
|5|FGLS estimation results with alternative defnitions of distance: net FDI infows .|.<br>32|
|6|Alternative PTA specifcation estimation results: net FDI infows . . . . . . . . . .|.<br>34|
|7|Estimation results by income level: net FDI infows . . . . . . . . . . . . . . . . . .|.<br>38|
|8|Estimation results by time period: net FDI infows . . . . . . . . . . . . . . . . . .|.<br>40|
|9|Regional defnitions and country membership . . . . . . . . . . . . . . . . . . . . .|.<br>45|
|10|Variable names and codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|.<br>46|
|11|Fixed efects and FGLS estimation results: net FDI infows<br>. . . . . . . . . . . . .|.<br>53|