“Regional policy, integration and the distribution of foreign investment” by Udo BROLL
Dresden University of Technology
Jack E. WAHL
In this note economic integration is viewed as a situation where countries within a union coordinate their industrial policies. We demonstrate that greater regional policy coordination between countries may induce more specialization instead of the intended diversification in interregional allocations of foreign investment. Thus international capital flows tend to become more concentrated in an integrated economy. This is in contrast to the objectives of regional policy of the European union.