On the Dynamics of Exports and FDI: The Spanish Internationalization Process
AbstractThis paper provides further insights into the dynamics of exports and outward foreign direct investment (FDI) flows in Spain from a time-series approach. The contribution of the paper is twofold: i) the existence of either substitution or a complementary relationship between Spanish outward investments and exports is empirically tested using a multivariate cointegrated model (VECM). The evolution in exchange flows (1993-2008) and country-specific variables (such as world demand - including Spain’s main recently growing foreign markets - for trade flows and the relative price of exports in order to proxy new global competitors) are taken into account for the first time. And ii) the growth in the trade of services in recent decades leads us to test a specific causality relationship by disaggregating between goods and services flows. Our results provide evidence of a positive (Granger) causality relationship running from FDI to exports of goods (stronger) and to exports of services (weaker) in the long run, the complementarity relation of which is consistent with vertical FDI strategies. In the short run, however, only exports of goods are affected (positively) by FDIs.
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Bibliographic InfoPaper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201010.
Length: 35 pages
Date of creation: Jul 2010
Date of revision: Jul 2010
Foreign Direct Investment; Exports; Granger-Causality. JEL classification:F21; F40;
Find related papers by JEL classification:
- Gra - Financial Economics - - - - -
- JEL - Labor and Demographic Economics - - - - -
- cla - - - - - -
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
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