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Effects of the Euro-Mediterranean Partnership on Tunisian FDI Inflows

ABSTRACT This article focuses on the effect of regional integration agreements (RIA) on foreign direct investment (FDI) inflows to developing countries, particularly on the Euro-Mediterranean Agreement signed by the Tunisian government in 1995. The econometric study is based on an extended gravity model treated with the Heckman technique to account for censorship of the explained variable. The main findings are that traditional economic determinants are still the main motivation for foreign investors to invest in Tunisia and that the regional integration process had no effect on this choice.