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Foreign Direct Investment, Merchandise and Services Trade in a Transition Economy: The Case of Cambodia


  • Tuck Cheong Tang
  • Koi Nyen Wong


Since the liberalization of trade and investment in the 1990s, inward foreign direct investment (FDI) has been seen to play a greater role in forging trade flows, integration into the regional and international markets and economic development for a transition economy such as Cambodia. Despite her recent progress in attracting FDI and fostering trade, the direction of causality between inward FDI, exports and imports of merchandise as well as services has not been empirically explored. The findings show that inward FDI not only can promote both merchandise and services exports but also indicate the presence of backward and forward linkages, which could result in positive externalities. However, based on the impulse response analysis, it seems that merchandise exports are more vulnerable than services exports to an unanticipated shift in FDI inflows in the medium run.

Suggested Citation

  • Tuck Cheong Tang & Koi Nyen Wong, 2011. "Foreign Direct Investment, Merchandise and Services Trade in a Transition Economy: The Case of Cambodia," International Economic Journal, Taylor & Francis Journals, vol. 25(2), pages 251-267.
  • Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:251-267 DOI: 10.1080/10168737.2011.580581

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    Cited by:

    1. repec:rej:journl:v:19:y:2016:i:62:p:95-118 is not listed on IDEAS
    2. Tuck cheong Tang & Ravin Chea, 2013. "Export-Led Growth in Cambodia: An Empirical Study," Economics Bulletin, AccessEcon, vol. 33(1), pages 655-662.
    3. Pradhan, Rudra P. & Arvin, Mak B. & Hall, John H. & Bahmani, Sahar, 2014. "Causal nexus between economic growth, banking sector development, stock market development, and other macroeconomic variables: The case of ASEAN countries," Review of Financial Economics, Elsevier, vol. 23(4), pages 155-173.
    4. repec:rej:journl:v:19:y:2016:i:61:p:47-70 is not listed on IDEAS


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