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35 J. Common Mkt. Stud. 1 (1997)

handle is hein.journals/jcmks35 and id is 1 raw text is: 













Journal of Common Market Studies                                 Vol. 35, No. 1
                                                                   March 1997







  The European Internal Market Programme

    and Inbound Foreign Direct Investment*




                              JOHN H. DUNNING
              Graduate School of Management, Rutgers University,
              University Heights, 180 University Avenue, Newark,
                         New  Jersey 07102-1895, USA





                                  PART I

           I. Introduction: European   Integration  Prior to 1985

During the late 1960s and 1970s, there were several scholarly attempts to assess
the impact  of the European   Common Market (ECM) - the first phase of
economic  integration within the European Community   (EC)l - on foreign direct
investment (fdi), both between Member States and from countries outside the EC
to countries within it.2 Most of these studies were longitudinal and used time
series, rather than cross-sectional, statistics. Although their results were sensi-
tive to the data and the econometric models chosen,3 all supported the proposi-
tion that, while the removal  of intra-EC tariffs, and the establishment of a
common   external tariff, increased both intra- and extra-EC fdi - and sometimes


* This is the first part of a two-part article. The second part will appear in the next (i.e. June 1997) issue of
the Journal of Common Market Studies
'Now called the European Union (EU). However, as most of the analysis contained in this article predates
the formation of the European Union, we shall use the expression European Community (EC) throughout.
2 For a review of these studies, see UN (1993a).
Some, for example, compared fdi in the EC with that in non-EC countries in Western Europe; others
compared fdi flows in the pre-EC period with those in the post-EC period, and attempted to explain the
differences with respect to a number of explanatory variables, including a proxy for the ECM.

@ Blackwell Publishers Ltd 1997, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA

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