FDI Penetration and Net Trade in the EU Accession Countries
This paper explores the link between foreign direct investment and trade in a panel of four countries that will accede to the European Union in 2004: Poland, Hungary, the Czech Republic and Slovenia. We augment standard demand-side export and import equations with a measure of FDI penetration. We compare results based on a panel mean-group estimator with a fixed-effects panel model that allows variation across slope parameters where necessary. We find that FDI penetration has a broadly neutral impact on the trade balance. However, the trade intensity of foreign firms differs significantly across countries.
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|Date of creation:||Jun 2003|
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