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FDI and trade: A Granger causality analysis in a heterogeneous panel

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  • Raphaël Chiappini

    ()
    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])

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    Abstract

    This paper will investigate the Granger causality between outward Foreign Direct Investment (FDI) and the exports of goods and services in 11 European countries from 1996 to 2008. Using a new method to evaluate causality in a heterogeneous panel, we find that the causal relationship from FDI to exports is homogeneous among the panel. However, we find strong evidence of a heterogeneity of the causal relationship from exports to FDI in our sample.

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    Bibliographic Info

    Paper provided by HAL in its series Post-Print with number halshs-00853441.

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    Date of creation: 2011
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    Publication status: Published, Economics Bulletin, 2011, 31, 4, 2975-2985
    Handle: RePEc:hal:journl:halshs-00853441

    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00853441
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    Related research

    Keywords: FDI; trade; Granger causality tests;

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    14. Robert Hoffmann & Chew-Ging Lee & Bala Ramasamy & Matthew Yeung, 2005. "FDI and pollution: a granger causality test using panel data," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(3), pages 311-317.
    15. Peter C. B. Phillips & Donggyu Sul, 2003. "Dynamic panel estimation and homogeneity testing under cross section dependence *," Econometrics Journal, Royal Economic Society, Royal Economic Society, vol. 6(1), pages 217-259, 06.
    16. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, Econometric Society, vol. 37(3), pages 424-38, July.
    17. Harald Oberhofer & Michael Pfaffermayr, 2008. "FDI versus Exports Substitutes or Complements? A Three Nations Model and Empirical Evidence," FIW Working Paper series, FIW 012, FIW.
    18. Lionel Fontagné & Michaël Pajot, 1997. "How Foreign Direct Investment Affects International Trade and Competitiveness: an Empirical Assessment," Working Papers 1997-17, CEPII research center.
    19. Venet, Baptiste & Hurlin, Christophe, 2001. "Granger Causality Tests in Panel Data Models with Fixed Coefficients," Economics Papers from University Paris Dauphine 123456789/6159, Paris Dauphine University.
    20. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, American Economic Association, vol. 87(4), pages 520-44, September.
    21. Clausing, Kimberly A, 2000. "Does Multinational Activity Displace Trade?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 38(2), pages 190-205, April.
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