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FDI and Trade in Portugal: a gravity analysis

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Author Info

  • Ana Paula Africano

    ()
    (CEMPRE, Faculdade de Economia, Universidade do Porto)

  • Manuela Magalhaes

    ()
    (IPCA e Faculdade de Economia, Universidade do Porto)

Abstract

This study investigates the relation between the stock of foreign direct investment (FDI) and the geographical pattern of trade flows in the Portuguese economy. The gravity model is applied to bilateral trade between Portugal and OECD countries plus Brazil from 1998 to 2000. The stock of inward FDI is positively related to trade suggesting the existence of complementary between the two. This effect is stronger on exports than on imports resulting in a positive impact on trade balance. It is also found that the stock of outward FDI has no significant relation either with Portuguese exports or imports. Finally, FDI helps to explain the above “normal” exports to the EU and the below “normal” imports from Candidate Countries.

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File URL: http://www.fep.up.pt/investigacao/workingpapers/05.04.18_wp174_anapaula.pdf
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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 174.

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Length: 24 pages.
Date of creation: Apr 2005
Date of revision:
Handle: RePEc:por:fepwps:174

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Keywords: International Trade; Foreign Direct Investment; Gravity Model.;

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References

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Citations

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Cited by:
  1. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany.
  2. Manuela Magalhães & Ana Paula Africano, 2007. "A Panel Analysis of the FDI Impact on International Trade," NIPE Working Papers 6/2007, NIPE - Universidade do Minho.
  3. Jungnickel, Rolf & Borrmann, Christine & Keller, Dietmar, 2005. "What gravity models can tell us about the position of German FDI in Central and Eastern Europe," HWWA Discussion Papers 328, Hamburg Institute of International Economics (HWWA).
  4. Timo Mitze & Björn Alecke & Gerhard Untiedt, 2009. "Trade-FDI Linkages in a System of Gravity Equations for German Regional Data," Ruhr Economic Papers 0084, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. H. Richard Nakamura & Mikael Olsson & Mikael Lönnborg, 2012. "FDI in the post-EU accession Baltic Sea Region: A global or a regional concern?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(2), pages 89-108, December.

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