IDEAS home Printed from https://ideas.repec.org/a/eee/inteco/v172y2022icp227-237.html
   My bibliography  Save this article

Does FDI have differential impacts on exports? Evidence from developing countries

Author

Listed:
  • Sahoo, Pravakar
  • Dash, Ranjan Kumar

Abstract

Theoretical literature indicates that foreign direct investment (FDI) inflows can, directly and indirectly, promote exports by augmentation of domestic capital, technological and knowledge-based spillovers, improvements in competitiveness, and strengthening export channels. However, empirical studies have shown that the benefits of FDI for exports may not be automatic and could vary according to the characteristics of the recipient country. Accordingly, the objective of the current study is to understand the implications of foreign investment for exports of 93 developing countries during 2000–2017 using panel data analysis. It also distinguishes between different types of developing countries – dividing the sample into lower-income countries (LICs), lower and middle-income countries (LMICs), and emerging countries – to study the differential effects of FDI for these different country groups. The study finds that FDI complements exports, and the complementary effect is contingent upon the development levels of the host country. FDI is most effective for promoting exports for emerging countries and least effective for LICs. Accordingly, the study advocates for well-designed policies that prioritize channeling FDI to strategic sectors and push for improvements in the quality of human capital, financial markets, and infrastructure.

Suggested Citation

  • Sahoo, Pravakar & Dash, Ranjan Kumar, 2022. "Does FDI have differential impacts on exports? Evidence from developing countries," International Economics, Elsevier, vol. 172(C), pages 227-237.
    • Handle: RePEc:eee:inteco:v:172:y:2022:i:c:p:227-237
    DOI: 10.1016/j.inteco.2022.10.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2110701722000786
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.inteco.2022.10.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Radovan Kastratović, 2023. "Exporting decision of agricultural firms: The role of foreign direct investment," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 960-984, October.
    2. Osei, Michael J. & Kim, Jaebeom, 2023. "Financial development and the growth effect of foreign direct investment: Does one size fit all?," International Economics, Elsevier, vol. 173(C), pages 276-283.
    3. Idrys Fransmel Okombi & Beaudelaire Francois Tsinguia-Kenfack, 2024. "Foreign direct investment and economic complexity in developing countries: does public expenditure on education matter?," SN Business & Economics, Springer, vol. 4(1), pages 1-38, January.

    More about this item

    Keywords

    FDI; Exports; LICs; LMICs; ECs; GMM Models;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F10 - International Economics - - Trade - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:inteco:v:172:y:2022:i:c:p:227-237. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/21107017 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.