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The impact of FDI and socio-cultural similarity on international trade: Poisson pseudo-maximum likelihood estimation of a Russian trade model

Author

Listed:
  • Ichiro Iwasaki

    (Institute of Economic Research, Hitotsubashi University)

  • Keiko Suganuma

    (College of Bioresource Sciences, Nihon University)

Abstract

To empirically examine the impact of foreign direct investment and socio-cultural similarity on international trade between Russia and developed economies, we estimated a gravity model using panel data from Russia and 23 OECD member countries. To deal with the problem of Jensen's inequality, in which the expected value of the logarithm of a random variable is different from the logarithm of its expected value, we applied the Poisson pseudo-maximum likelihood estimator to our panel regression. The estimation results indicate that foreign direct investment and socio-cultural similarity are determining factors in the trade volume between Russia and these developed economies. We also found that the trade and investment activities of Russian firms differ considerably from their counterparts in developed economies.

Suggested Citation

  • Ichiro Iwasaki & Keiko Suganuma, 2015. "The impact of FDI and socio-cultural similarity on international trade: Poisson pseudo-maximum likelihood estimation of a Russian trade model," Economics Bulletin, AccessEcon, vol. 35(2), pages 1020-1033.
    • Handle: RePEc:ebl:ecbull:eb-14-00775
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    Cited by:

    1. Ichiro Iwasaki & Mathilde Maurel, 2017. "The Impact of Crisis on Firm Creation and Regeneration in Russia: Regional Panel Data Analysis," Post-Print halshs-01505659, HAL.
    2. Tokunaga, Masahiro & Suganuma, Keiko & Odagiri, Nami, 2018. "From Russia to Eurasia : Specific Features of the “Russosphere” from the Perspective of Business Activities of Japanese Firms," RRC Working Paper Series 77, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    3. Ichiro Iwasaki & Keiko Suganuma, 2015. "Foreign direct investment and regional economic development in Russia: an econometric assessment," Economic Change and Restructuring, Springer, vol. 48(3), pages 209-255, November.
    4. Iwasaki, Ichiro & Maurel, Mathilde & Meunier, Bogdan, 2016. "Firm entry and exit during a crisis period: Evidence from Russian regions," Russian Journal of Economics, Elsevier, vol. 2(2), pages 162-191.
    5. Adolfo Maza & Paula Gutiérrez-Portilla, 2022. "Outward FDI and exports relation: A heterogeneous panel approach dealing with cross-sectional dependence," International Economics, CEPII research center, issue 170, pages 174-189.

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    More about this item

    Keywords

    international trade; foreign direct investment (FDI); gravity model; Poisson regression; WTO; Russia;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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