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International Trade, Foreign Direct Investment, and Domestic Market Performance

Author

Listed:
  • Barbara El-Osta

    (General Accounting Office)

  • Craig R. MacPhee

    (University of Nebraska)

  • David I. Rosenbaum

    (University of Nebraska)

Abstract

We develop a model to estimate simultaneously import shares, export shares, outward foreign direct investment and domestic profits for a large sample of U.S. manufacturing industries. In our model, trade barriers alter the ability of domestic market structure to influence domestic performance. The results indicate that trade flows behave as expected in response to factor intensity. Profits are disciplined by imports and enhanced by exports. Concentration reduces both import and export shares but economies of scale increase them. Exports are complements rather than substitutes for foreign direct investment.

Suggested Citation

  • Barbara El-Osta & Craig R. MacPhee & David I. Rosenbaum, 1996. "International Trade, Foreign Direct Investment, and Domestic Market Performance," Eastern Economic Journal, Eastern Economic Association, vol. 22(1), pages 63-74, Winter.
    • Handle: RePEc:eej:eeconj:v:22:y:1996:i:1:p:63-74
    as

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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume22/V22N1P63_74.pdf
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    References listed on IDEAS

    as
    1. de Ghellinck, Elisabeth & Geroski, Paul A & Jacquemin, Alexis, 1988. "Inter-industry Variations in the Effect of Trade on Industry Performance," Journal of Industrial Economics, Wiley Blackwell, vol. 37(1), pages 1-19, September.
    2. Caves, Richard E., 1985. "International trade and industrial organization: Problems, solved and unsolved," European Economic Review, Elsevier, vol. 28(3), pages 377-395, August.
    3. Marvel, Howard P, 1980. "Foreign Trade and Domestic Competition," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 103-122, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Carter, Colin A. & Yilmaz, Alper, 1999. "Foreign Direct Investment (Fdi) And Trade - Substitutes And Complements? An Application To The Processed Food Industry," 1999 Annual meeting, August 8-11, Nashville, TN 21665, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Lee, Jooh & Habte-Giorgis, Berhe, 2004. "Empirical approach to the sequential relationships between firm strategy, export activity, and performance in U.S. manufacturing firms," International Business Review, Elsevier, vol. 13(1), pages 101-129, February.
    3. Carter, Colin A. & Yilmaz, Alper, 1999. "Foreign Direct Investment (FDI) and Trade-Substitutes or Complements? An Application to the Processed Food Industry," 1999 Annual meeting, August 8-11, Nashville, TN 271492, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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    More about this item

    Keywords

    Concentration; Exports; Foreign Direct Investment; Import; International Trade; Market Performance; Market Structure; Trade;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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