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Foreign Direct Investment and Trade in the Asia-Pacific Region: Complementarity, Distance and Regional Economic Integration

Author

Listed:
  • Nam Jeon , Bang

    (Drexel University)

  • F. Stone , Susan

    (Productivity Commission of Australia)

Abstract

This paper investigates the relationship between FDI and trade in the Asia-Pacific economies by examining the bilateral flows of trade and FDI in a cross-sectional study. The estimation results based on the gravity model show a significant and positive relationship between trade and FDI, implying a comple mentary relationship. Estimated coefficients also imply that trade has a larger impact on FDI flows than such investment has on bilateral trade flows. It is evident that the distance between the home country and the host country is a significant resistance factor for trade, but not for FDI. The estimation results.

Suggested Citation

  • Nam Jeon , Bang & F. Stone , Susan, 2000. "Foreign Direct Investment and Trade in the Asia-Pacific Region: Complementarity, Distance and Regional Economic Integration," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 460-485.
    • Handle: RePEc:ris:integr:0141
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    Citations

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    Cited by:

    1. Malsha Mayoshi Rathnayaka Mudiyanselage & Gheorghe Epuran & Bianca Tescașiu, 2021. "Causal Links between Trade Openness and Foreign Direct Investment in Romania," JRFM, MDPI, vol. 14(3), pages 1-18, February.
    2. Fragkiskos Filippaios & Marina Papanastassiou & Robert Pearce, 2003. "The evolution of US outward foreign direct investment in the pacific rim: a cross-time and country analysis," Applied Economics, Taylor & Francis Journals, vol. 35(16), pages 1779-1787.
    3. Aradhna Aggarwal, 2008. "Regional Economic Integration and FDI in South Asia - Prospects and Problems," Macroeconomics Working Papers 22141, East Asian Bureau of Economic Research.
    4. Shehu U.R. Aliyu & Sani Bawa, 2015. "Gravity model by panel data approach: empirical evidence from Nigeria," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 8(1), pages 42-57.
    5. Kayam, Saime Suna & Hisarciklilar, Mehtap, 2009. "Determinants of Turkish FDI abroad," MPRA Paper 17813, University Library of Munich, Germany.
    6. Ansari, Nasim & Khan, Tamanna, 2011. "FDI and regional economic integration in SAARC region: problems and prospects," MPRA Paper 32365, University Library of Munich, Germany.
    7. Jeon, Bang Nam & Tang, Linghui, 2005. "Information Technology and Bilateral FDI: Theory and Evidence," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 613-630.
    8. Willem Thorbecke & Nimesh Salike, 2016. "Understanding FDI and production networks in East Asia," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 30(2), pages 57-71, November.
    9. Schwieren, C.A.A. & Vendrik, M.C.M. & de Gijsel, P.P., 2004. "The power of competition: reducing or reinforcing discrimination?," Research Memorandum 041, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    10. Jaap Bos & Mindel van de Laar, 2004. "Explaining Foreign Direct Investment in Central and Eastern Europe: an Extended Gravity Approach," DNB Working Papers 008, Netherlands Central Bank, Research Department.
    11. Mebratu Seyoum & Renshui Wu & Jihong Lin, 2014. "Foreign Direct Investment and Trade Openness in Sub-Saharan Economies: A Panel Data Granger Causality Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 82(3), pages 402-421, September.
    12. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
    13. Anwar, Amar Iqbal & Hasse, Rolf & Rabbi, Fazli, 2008. "Location Determinants of Indian Outward Foreign Direct Investment: How Multinationals Choose their Investment Destinations?," MPRA Paper 47397, University Library of Munich, Germany.

    More about this item

    Keywords

    Complementarity Between FDI and Trade; APEC;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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