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Foreign Direct Investment and Trade: A Causality Analysis

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  • Oscar Bajo-Rubio
  • María Montero-Muñoz

Abstract

In this article, we analyze the relationship between outward foreign direct investment (FDI) and exports, using Spanish quarterly data for the period 1977–1998, by means of Granger causality tests in a cointegration framework. Our results point to the existence of a relationship of complementarity between both variables, with Granger causality running in the short run from outward FDI to exports, and bilateral Granger causality in the long run. Copyright Kluwer Academic Publishers 2001

Suggested Citation

  • Oscar Bajo-Rubio & María Montero-Muñoz, 2001. "Foreign Direct Investment and Trade: A Causality Analysis," Open Economies Review, Springer, vol. 12(3), pages 305-323, July.
  • Handle: RePEc:kap:openec:v:12:y:2001:i:3:p:305-323
    DOI: 10.1023/A:1011185507169
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    More about this item

    Keywords

    foreign direct investment; exports; Granger causality;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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