Regional Economic Integration and Foreign Direct Investment: The Case of German Investment in Europe

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Abstract
The European Economic Community originally came into existence following the Treaty of Rome in 1957. Member states planned to harmonise their tariffs, pursue a common trade policy and liberalise intra-Community trade. All internal customs duties and quantitative restrictions on trade were successfully removed by 1968. However it subsequently became clear that this had not resulted in the full integration of product markets in Europe, with capital movements and trade continuing to be restricted by capital controls and non-tariff barriers. In the mid-1980s the European Commission identified around 300 areas in which legislative action could be taken to help the free flow of goods, services, capital and labour within the community. This led to the Single European Act in 1986 which aimed to complete the internal market by the end of 1992.