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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)

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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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Publisher 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
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Related research
Keywords: FDI Trade Gravity Analysis Panel Data

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Find related papers by JEL classification:
F1 - International Economics - - Trade
F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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References listed on IDEAS
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  8. 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. [Downloadable!] (restricted)
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  13. James R. Markusen, 1997. "Trade versus Investment Liberalization," NBER Working Papers 6231, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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