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A Panel Analysis of the FDI Impact on International Trade

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Author Info

  • Manuela Magalhães

    ()
    (Universidade do Minho - NIPE)

  • Ana Paula Africano

    ()
    (Universidade do Porto)

Abstract

This paper examines the relationship between Foreign Direct Investment (FDI) and international trade. Specifically, the relationship between the stock of outward FDI, and inward FDI and Imports and Exports in the Portuguese economy. This paper also studies some technical problems associated with panel data have frequently been ignored in previous studies. The problems of serial and contemporaneous correlation have not been taken into account by a panel approach and, as we know, they can have an impact on estimates and statistical inferences. The results show that there exist a country-specific effect on the corrected panel data of heteroscedasticity and correltion and a complementary relationship between trade and inward stock of FDI.

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Bibliographic Info

Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 6/2007.

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Date of creation: 2007
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Handle: RePEc:nip:nipewp:6/2007

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Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
Phone: +351-253604510 ext 5532
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Web page: http://www3.eeg.uminho.pt/economia/nipe/versao_inglesa/index_uk.htm
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Keywords: FDI; Trade; Gravity Analysis; Panel Data;

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References

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  1. Peter Egger & Michael Pfaffermayr, 2004. "Foreign Direct Investment and European Integration in the 1990s," The World Economy, Wiley Blackwell, vol. 27(1), pages 99-110, 01.
  2. Robert E. Lipsey & Eric D. Ramstetter & Magnus Blomstrom, 2000. "Outward FDI and Parent Exports and Employment: Japan, the United States, and Sweden," NBER Working Papers 7623, National Bureau of Economic Research, Inc.
  3. Markusen, James R. & Venables, Anthony J., 1998. "Multinational firms and the new trade theory," Journal of International Economics, Elsevier, vol. 46(2), pages 183-203, December.
  4. James R. Markusen, 1997. "Trade versus Investment Liberalization," NBER Working Papers 6231, National Bureau of Economic Research, Inc.
  5. Brenton, Paul & DiMauro, Francesca & Lücke, Matthias, 1998. "Economic integration and FDI: an empirical analysis of foreign investment in the EU and in Central and Eastern Europe," Kiel Working Papers 890, Kiel Institute for the World Economy.
  6. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-44, September.
  7. Clausing, Kimberly A, 2000. "Does Multinational Activity Displace Trade?," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 190-205, April.
  8. Lionel Fontagné, 1999. "Foreign Direct Investment and International Trade: Complements or Substitutes?," OECD Science, Technology and Industry Working Papers 1999/3, OECD Publishing.
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  11. James R. Markusen & Anthony J. Venables, 1996. "The Theory of Endowment, Intra-Industry, and Multinational Trade," NBER Working Papers 5529, National Bureau of Economic Research, Inc.
  12. Jonathan Eaton & Akilo Tamura, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Boston University - Institute for Economic Development 48, Boston University, Institute for Economic Development.
  13. Magnus Blomstrom & Ari Kokko, 1994. "Home Country Effects of Foreign Direct Investment: Evidence from Sweden," NBER Working Papers 4639, National Bureau of Economic Research, Inc.
  14. Head, Keith & Ries, John, 2001. "Overseas Investment and Firm Exports," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 108-22, February.
  15. Dunning, John H, 1979. "Explaining Changing Patterns of International Production: In Defence of the Eclectic Theory," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(4), pages 269-95, November.
  16. Isabelle Soubaya & Jean-Louis Mucchielli & Séverine Chédor, 2000. "Investissements directs à l'étranger des multinationales françaises et relations commerciales avec leurs filiales. Une analyse sur données individuelles d'entreprises," Revue économique, Presses de Sciences-Po, vol. 0(3), pages 747-760.
  17. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
  18. Ana Paula Africano & Manuela Magalhaes, 2005. "FDI and Trade in Portugal: a gravity analysis," FEP Working Papers 174, Universidade do Porto, Faculdade de Economia do Porto.
  19. David L. Carr & James R. Markusen & Keith E. Maskus, 2001. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," American Economic Review, American Economic Association, vol. 91(3), pages 693-708, June.
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Cited by:
  1. B. Michael Gilroy & Elmar Lukas & Christian Heimann, 2010. "Welchen Einfluss hat die Anwesenheit von ausländischen und multinationalen Unternehmungen auf die deutschen Exporte?," Working Papers CIE 31, University of Paderborn, CIE Center for International Economics.
  2. repec:pdn:wpaper:31 is not listed on IDEAS
  3. Carmen Fillat Castejón & Joseph F. Francois & Julia Woerz, 2008. "Trade through FDI: investing in services," Documentos de Trabajo dt2008-06, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  4. B. Michael Gilroy & Elmar Lukas & Christian Heimann, 2013. "Technologiestandort Deutschland und internationale Wissensspillover, Welchen Einfluss nehmen auslaendische MNU auf deutsche Exporte?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(5-6), pages 575-599, October.
  5. Miguel Lebre de Freitas & Ricardo Paes Mamede, 2008. "Structural Transformation and the role of Foreign Direct Investment in Portugal: a descriptive analysis for the period 1990-2005," GEE Papers 0009, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Dec 2008.
  6. Georgescu, George, 2012. "Fluxurile ISD in contextul crizei globale
    [The FDI flows under the global crisis effects]
    ," MPRA Paper 40842, University Library of Munich, Germany.
  7. Miguel Lebre de Freitas & Ricardo Paes Mamede, 2011. "Structural transformation of Portuguese exports and the role of foreign-owned firms: A descriptive analysis for the period 1995-2005," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, issue 33, pages 20-43, June.

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