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A Touch of Sophistication: FDI and Unit Values of Exports

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  • Javorcik, Beata
  • Harding, Torfinn

Abstract

The debate on trade and growth increasingly focuses on the composition of exports. Exports of more "sophisticated" products appear to be positively correlated with growth, and upgrading the quality of exports is high on the policy agenda of many countries. This study presents evidence suggesting that attracting inflows of FDI offers potential for upgrading a country?s export basket. The empirical analysis relates unit values of exports measured at the 4-digit SITC level to data on sectors treated by investment promotion agencies as priority in their efforts to attract FDI. The sample covers 116 countries over the period 1984-2000. The findings are consistent with a positive effect of FDI on unit values of exports in developing countries. However, such a relationship is less evident in developed countries. These results suggest that FDI can help bridge gaps in production and marketing techniques between developing and high income economies.

Suggested Citation

  • Javorcik, Beata & Harding, Torfinn, 2009. "A Touch of Sophistication: FDI and Unit Values of Exports," CEPR Discussion Papers 7596, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7596
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    Cited by:

    1. Dr David Foya & Merhluli Sibanda, 2021. "An examination of the effectiveness of investment promotion practices in Victoria Falls Municipality (2010-217)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(10), pages 528-543, October.
    2. Fan, Zhaobin & Anwar, Sajid & Huang, Shujuan, 2018. "Cultural diversity and export sophistication," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 508-522.
    3. Yingzhu Yang & Qunhao Wang & Yang Gao & Lexiang Zhao, 2022. "Does Environmental Regulation Promote the Upgrade of the Export Technology Structure: Evidence from China," Sustainability, MDPI, vol. 14(16), pages 1-13, August.
    4. Florian Mayneris & Sandra Poncet, 2010. "Export Performance of China's Domestic Firms: the Role of Foreign Export Spillovers," Working Papers 2010-32, CEPII research center.
    5. Shi, Xiaojing & Zeng, Rui, 2024. "Do supply chain shocks affect technological sophistication of exporting? Evidence from China’s anti-dumping measures on intermediate products," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 314-332.
    6. Alberto Romero & Mary Analí Vera Colina, 2014. "Las empresas transnacionales y los países en desarrollo," Revista Tendencias, Universidad de Narino, vol. 15(2), pages 58-89.
    7. Lihua Gu, 2021. "The Impact of Intelligent Manufacturing on Export Sophistication: Evidence from Industrial Robots," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(12), pages 183-183, July.
    8. Su, Xiaoyan & Anwar, Sajid & Zhou, Ying & Tang, Xuan, 2020. "Services trade restrictiveness and manufacturing export sophistication," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    9. Kaitila, Ville, 2010. "Quality-adjusted similarity of EU-countriesŽ export structure," Discussion Papers 1227, The Research Institute of the Finnish Economy.
    10. Foued Badr Gabsi & Nihel Frikha, 2025. "Empirical Analysis of the Determinants of Structural Transformation in the MENA Region," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 378-403, June.

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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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