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Foreign Direct Investment, Merchandise and Services Trade in a Transition Economy: The Case of Cambodia

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Author Info

  • Tuck Cheong Tang
  • Koi Nyen Wong

Abstract

Since the liberalization of trade and investment in the 1990s, inward foreign direct investment (FDI) has been seen to play a greater role in forging trade flows, integration into the regional and international markets and economic development for a transition economy such as Cambodia. Despite her recent progress in attracting FDI and fostering trade, the direction of causality between inward FDI, exports and imports of merchandise as well as services has not been empirically explored. The findings show that inward FDI not only can promote both merchandise and services exports but also indicate the presence of backward and forward linkages, which could result in positive externalities. However, based on the impulse response analysis, it seems that merchandise exports are more vulnerable than services exports to an unanticipated shift in FDI inflows in the medium run.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2011.580581
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 25 (2011)
Issue (Month): 2 ()
Pages: 251-267

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Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:251-267

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Related research

Keywords: Causality; Cambodia; trade; foreign direct investment;

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Cited by:
  1. Tuck cheong Tang & Ravin Chea, 2013. "Export-Led Growth in Cambodia: An Empirical Study," Economics Bulletin, AccessEcon, vol. 33(1), pages 655-662.

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