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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)

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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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Publisher 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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Related research
Keywords: International Trade Foreign Direct Investment Gravity Model.

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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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    Other versions:
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    Other versions:
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  14. Jonathan Eaton & Akiko Tamura, 1995. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," NBER Working Papers 4758, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  15. James R. Markusen, 1997. "Trade versus Investment Liberalization," NBER Working Papers 6231, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Peter Egger, 2001. "European exports and outward foreign direct investment: A dynamic panel data approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(3), pages 427-449, September. [Downloadable!] (restricted)
    Other versions:
  17. Paul Brenton & Francesca Di Mauro & Matthias Lücke, 1999. "Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe," Empirica, Springer, vol. 26(2), pages 95-121, June. [Downloadable!] (restricted)
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    Other versions:
  19. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Manuela Magalhães & Ana Paula Africano, 2007. "A Panel Analysis of the FDI Impact on International Trade," FEP Working Papers 235, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
    Other versions:
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