IDEAS home Printed from https://ideas.repec.org/a/wsi/jicepx/v09y2018i01n02ns1793993318500059.html
   My bibliography  Save this article

The Impact of Foreign Direct Investment on Home Country Exports

Author

Listed:
  • Vera Silva

    () (Faculty of Economics, University of Porto, Porto 4200-464, Portugal)

  • Rosa Forte

    (#x2020;CEF.UP — Center for Economics and Finance, Faculty of Economics, University of Porto, Portugal)

Abstract

Exports and foreign direct investment (FDI) are two alternative foreign markets entry modes. From a theoretical point of view, there are arguments which support two different relationships between FDI and exports: complementary and substitution. Most empirical studies, however, have concluded with a complementary relationship. Since existing studies at more disaggregated levels have focused solely on the manufacturing industry, this paper aims at studying the relationship between FDI and home country exports based on a large sample of Portuguese firms, belonging to manufacturing and services, for the period 2006–2012. Using a fixed-effects model, results obtained suggest that the control of heterogeneity between firms is essential to clarify the relationship between FDI and exports and this has been a factor often overlooked.

Suggested Citation

  • Vera Silva & Rosa Forte, 2018. "The Impact of Foreign Direct Investment on Home Country Exports," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 9(01n02), pages 1-22, February.
  • Handle: RePEc:wsi:jicepx:v:09:y:2018:i:01n02:n:s1793993318500059
    DOI: 10.1142/S1793993318500059
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S1793993318500059
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. Head, Keith & Ries, John, 2001. "Overseas Investment and Firm Exports," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 108-122, February.
    3. Dirk Engel & Vivien Procher, 2013. "Home Firm Performance After Foreign Investments and Divestitures," The World Economy, Wiley Blackwell, vol. 36(12), pages 1478-1493, December.
    4. Hongshik Lee, 2010. "The Destination of Outward FDI and the Performance of South Korean Multinationals," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 46(3), pages 59-66, May.
    5. Rosa Forte & Vera Silva, 2017. "Outward FDI and Home Country Exports: Theoretical Approaches and Empirical Evidence," The International Trade Journal, Taylor & Francis Journals, vol. 31(3), pages 245-271, May.
    6. Rodríguez-Pose, Andrés & Tselios, Vassilis & Winkler, Deborah & Farole, Thomas, 2013. "Geography and the Determinants of Firm Exports in Indonesia," World Development, Elsevier, vol. 44(C), pages 225-240.
    7. Yigang Pan & David K Tse, 2000. "The Hierarchical Model of Market Entry Modes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(4), pages 535-554, December.
    8. Belderbos, Rene & Sleuwaegen, Leo, 1998. "Tariff jumping DFI and export substitution: Japanese electronics firms in Europe," International Journal of Industrial Organization, Elsevier, vol. 16(5), pages 601-638, September.
    9. Jolanda Hessels & André Stel, 2011. "Entrepreneurship, export orientation, and economic growth," Small Business Economics, Springer, vol. 37(2), pages 255-268, September.
    10. Roger Svensson, 1996. "Effects of overseas production on home country exports: Evidence based on Swedish multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(2), pages 304-329, September.
    11. Keith Head & John Ries, 2004. "Exporting and FDI as Alternative Strategies," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 409-423, Autumn.
    12. Yan Chen & Wen-Chung Hsu & Chengqi Wang, 2012. "Effects of outward FDI on home-country export competitiveness: The role of location and industry heterogeneity," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 5(1), pages 56-73, February.
    13. Miguel Fonseca & António Mendonça & José Passos, 2010. "Home Country Trade Effects of Outward FDI: an analysis of the Portuguese case, 1996-2007," FEP Working Papers 365, Universidade do Porto, Faculdade de Economia do Porto.
    14. Séverine Chédor & Jean-Louis Mucchielli & Isabelle Soubaya, 2000. "Investissements directs à l'étranger des multinationales françaises et relations commerciales avec leurs filiales. Une analyse sur données individuelles d'entreprises," Revue Économique, Programme National Persée, vol. 51(3), pages 747-760.
    15. Lipsey, Robert E & Weiss, Merle Yahr, 1984. "Foreign Production and Exports of Individual Firms," The Review of Economics and Statistics, MIT Press, vol. 66(2), pages 304-308, May.
    16. Kichun Kang, 2012. "Is the relationship between foreign direct investment and trade different across developed and developing countries? Evidence from Korea," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 26(2), pages 144-154, November.
    17. Rosa Forte, 2004. "The relationship between foreign direct investment and international trade. Substitution or complementarity? A survey," FEP Working Papers 140, Universidade do Porto, Faculdade de Economia do Porto.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    FDI; firm exports; Portugal;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:jicepx:v:09:y:2018:i:01n02:n:s1793993318500059. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim). General contact details of provider: http://www.worldscinet.com/jicep/jicep.shtml .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.