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Foreign Direct Investment and Export Performance: Empirical Evidence


  • Ali M Kutan

    () (1] Southern Illinois University, Edwardsville, Illinois, IL 62026-1102, USA[2] The William Davidson Institute Ann Arbor, Michigan, MI 48109-1234, USA.)

  • Goran Vukšić

    () (Institute of Public Finance, Zagreb, Croatia.)


We estimate the effects of foreign direct investment (FDI) inflows on exports in 12 Central and Eastern European (CEE) economies for the period between 1996 and 2004. We separate the effects of FDI into supply capacity-increasing effects and FDI-specific effects. The supply capacity-increasing effects arise when FDI inflows increase the host country's production capacity, which, in turn, increase export supply potential. The FDI-specific effects arise because the multinational company may have superior knowledge and technology, better information about export markets, or better contact to the supply chain of the parent firm than do local firms. Our empirical results indicate that, for all countries in our sample, FDI has increased domestic supply capacity and hence exports. However, FDI-specific effects on exports are observed only in the new member states of the European Union.

Suggested Citation

  • Ali M Kutan & Goran Vukšić, 2007. "Foreign Direct Investment and Export Performance: Empirical Evidence," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(3), pages 430-445, September.
  • Handle: RePEc:pal:compes:v:49:y:2007:i:3:p:430-445

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    Cited by:

    1. Chakraborty, Debashis & Mukherjee, Jaydeep & Lee, Jaewook, 2016. "Do FDI Inflows influence Merchandise Exports? Causality Analysis on India over 1991-2016," MPRA Paper 74851, University Library of Munich, Germany.
    2. Claudiu Tiberiu Albulescu & Daniel Goyeau, 2016. "The interaction between trade and FDI: the CEE countries experience," Papers 1609.02334,
    3. Ana S. Trbovich & Jana Subotić & Jasna Matić, 2013. "Foreign Direct Investment As Export Facilitator In Serbia’S Apparel Industry," Serbian Association of Economists Journal, SAE - Serbian Association of Economists, issue 5-6, pages 339-353, August.
    4. Gheorghe ZAMAN & Valentina VASILE & Mirela MATEI & Carmen CROITORU & George ENESCU, 2011. "Some challenging (macro)economic aspects of FDI in Romania," Romanian Journal of Economics, Institute of National Economy, vol. 33(2(42)), pages 21-58, December.
    5. Zaman Gheorghe & Vasile Valentina & Cristea Anca, 2012. "Sustainable Development Challenges And Fdi Impact In Host Countries," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 444-460, July.
    6. repec:krk:eberjl:v:2:y:2014:i:3:p:7-18 is not listed on IDEAS

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