Factor Endowments, Economic Integration, Round-Tripping, and Inward FDI: Evidence from the Baltic Economies

This paper studies the location choice of foreign multinational firms in Baltic economies Estonia, Latvia, and Lithuania using a knowledge-and-physical capital model across 2004–2017. We used Bayesian averaging estimation method to investigate set possible factors that drive inward FDI. Our analysis demonstrates factor endowments play dominant role driving vertical direct investment, while external market barriers generate “tariff-jumping” quantifies effects round-trip FDI, European integration, bilateral free trade agreements vis-à-vis FDI Baltics.