FDI, Trade and Integration in Mercosur
AbstractIn the 90’s, the Mercosur countries experienced a strong growth of trade and foreign direct investment (FDI). To examine the relationship between FDI, trade and regional integration in the Mercosur, we tested different disaggregated gravity equations on trade and FDI flows between two Mercosur members – Argentina and Brazil – and their partners during the 90’s. Our results attest a strong relationship between FDI and imports, but a weak and negative linkage between FDI and exports. This reinforces the perception that the investment flows into the Mercosur countries has generated strong flows of imports without generating exports. Another important result is the relevance of Mercosur in multinational firms strategies that seems to be different depending on the country where the firm is located. Firms installed in Brazil give an importance to the regional market while the firms installed in Argentina, assume that regional market is not a relevant issue.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 43886.
Date of creation: 2002
Date of revision:
FDI; International Trade; Regional Integration; Mercosur;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- F10 - International Economics - - Trade - - - General
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
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- Leandro Rothmuller, 2003. "Does FDI Matter for Trade in Brazil? An Application of the Gravity Model," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] c71, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
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