The Role of Mergers and Acquisitions in Foreign Direct Investment

Abstract

Global and regional interpenetration of markets during the 1970s and 1980s led to a great deal of industrial restructuring among developed as well as developing countries. Trade liberalization under the auspices of the GATT, in particular the Kennedy and Tokyo rounds of multilateral tariff cuts and establishment of codes of conduct on non-tariff barriers, helped to remove a broad array of trade distortions applied at the customs checkpoints of the industrial countries—to a large extent on a most-favored-nation basis. At the regional level, the EC economic integration of the 1960s and 1970s and its recommitment in 1985 through Single European Act, as well as the Canada-U.S. free trade pact, contributed a further freeing-up of markets, even as complementary monetary developments based on a broad-based removal of exchange controls liberalized international payments.