Do Currency Unions Affect Foreign Direct Investment? Evidence from US FDI Flows into the European

This paper investigates the effect of EMU on US FDI flows into the European Union using panel data from fifteen EU countries for the period 1966-2003. The empirical findings suggest that EMU had a positive and statistically significant impact on US FDI flows into the twelve countries that adopted the euro as their national currency. The increase in US FDI flows into the EU-12 was not accom-panied, however, by a decrease in US FDI flows into the three EU countries that opted out of adopting the euro as their national currency. 1