IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

An Empirical Assessment of a Tradeoff Between FDI and Exports

  • Hongshik Lee

    (Korean Institute for International Economic Policy)

  • Joon Hyung Lee
Registered author(s):

    The relation between exports and FDI could be complementary or substitutable depending on the types of FDI. Overseas investment to displace exports must have a substitution relation while FDI for vertical fragmentation between countries would boost the home export. Empirical studies have generally found a positive relation and finding a substitution relation is relatively recent. We investigate the relation between those two variables using detailed information of Korean multinational firms and their foreign affiliates from 1999 to 2004. In so doing, unlike previous studies, we consider the host countrys income level and various activities of each affiliate, whether it serves the host country or exports outside in particular. The complementary relation is found by simply following previous studies. Once we consider the host countrys income level and various activities of each affiliate, however, different results are produced. Our empirical results show substitution if the affiliates are located in a developed country and mainly serve the host country, while complementarity if the affiliates export their products outside of the host country. Moreover, the complementary effect is strengthened if they are located in a less developed country.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.eaber.org/node/22009
    Download Restriction: no

    Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 22009.

    as
    in new window

    Length:
    Date of creation: Jan 2007
    Date of revision:
    Handle: RePEc:eab:tradew:22009
    Contact details of provider: Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
    Web page: http://www.eaber.org

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Blonigen, Bruce A. & Davies, Ronald B. & Waddell, Glen R. & Naughton, Helen T., 2007. "FDI in space: Spatial autoregressive relationships in foreign direct investment," European Economic Review, Elsevier, vol. 51(5), pages 1303-1325, July.
    2. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    3. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2007. "Estimating models of complex FDI: Are there third-country effects?," Journal of Econometrics, Elsevier, vol. 140(1), pages 260-281, September.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eab:tradew:22009. 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: (Shiro Armstrong)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.