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Trade through FDI: investing in services

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  • Carmen Fillat Castejón

    (Department Applied Economics and Economic History. Faculty of Economics. University of Zaragoza, Spain)

  • Joseph F. Francois

    (University of Linz, Austria, and CEPR, London)

  • Julia Woerz

    (The Vienna Institute for International Economic Studies, Austria)

Abstract

The type of relationship between different modes of trading services internationally is of great interest, both for the academic literature and for liberalization policies under the GATS, because cross-border and commercial presence abroad might complement or substitute each other. This paper offers a consistent theoretical foundation for the application of the gravity model to services trade, using a composite demand model yielding testable hypothesis about that complementary or substitutive relationship and linking the results to market regulations as trade barriers. For the OECD countries over 1994-2004 a robust complementary effects in the short-run is found, reinforced in the long-run by an increased potential for cross-border imports bases on pervious FDI inflows, highlighting business, communication and financial services.

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Bibliographic Info

Paper provided by Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza in its series Documentos de Trabajo with number dt2008-06.

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Date of creation: Jun 2008
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Handle: RePEc:zar:wpaper:dt2008-06

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Postal: Gran via, 2 50005 Zaragoza
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Keywords: Imports; services; panel data; substitution and complementary effects;

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  1. Peter Egger & Michael Pfaffermayr, 2005. "Trade, Multinational Sales, and FDI in a Three-factor Model," Review of International Economics, Wiley Blackwell, vol. 13(4), pages 659-675, 09.
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Citations

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Cited by:
  1. Erik der Marel & Sébastien Miroudot, 2014. "The economics and political economy of going beyond the GATS," The Review of International Organizations, Springer, Springer, vol. 9(2), pages 205-239, June.
  2. Crozet, M. & Milet, E. & Mirza, D., 2013. "The Discriminatory Effect of Domestic Regulations on International Trade in Services: Evidence from Firm-Level Data," Working papers, Banque de France 451, Banque de France.
  3. Joseph Francois & Olga Pindyuk & Julia Woerz, 2008. "Trade Effects of Services Trade Liberalization in the EU," IIDE Discussion Papers 20080801, Institue for International and Development Economics.
  4. Arjan Lejour & Peter Smith, 2008. "International Trade in Services—Editorial Introduction," Journal of Industry, Competition and Trade, Springer, Springer, vol. 8(3), pages 169-180, December.
  5. Erik Marel & Ben Shepherd, 2013. "Services Trade, Regulation and Regional Integration: Evidence from Sectoral Data," The World Economy, Wiley Blackwell, vol. 36(11), pages 1393-1405, November.
  6. Erik van der Marel, 2012. "Determinants of Comparative Advantage in Services," FIW Working Paper series, FIW 087, FIW.
  7. M. T. Aparicio & I. Villanúa, 2012. "Selection criteria for overlapping binary Models," Documentos de Trabajo, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza dt2012-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  8. Raúl Serrano & Vicente Pinilla, 2013. "New directions of trade for the agri-food industry: a disaggregated approach for different income countries, 1963-2000," Documentos de Trabajo, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza dt2013-02, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  9. repec:hal:journl:halshs-00801398 is not listed on IDEAS

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