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The Influence of Foreign Direct Investment on Foreign Trade in the Visegrad Countries from 2001 to 2011

Author

Listed:
  • Wojciech Zysk

    (Cracow University of Economics)

  • Sławomir Śmiech

    (Cracow University of Economics)

Abstract

This paper is an attempt to settle the controversy around the motives connected with investing in the Visegrad countries and the verification of the hypothesis that FDI makes a significant impact on V4’s foreign trade. The relationship between the value of foreign direct investment in V4 countries in 2001-2011 and the geographic structure of trade in two directions: exports and imports, will be examined. The paper includes an analysis of the influence of FDI on foreign trade (the linear gravity model was used). FDI strongly influences the volume of Polish, Slovak and Czech exports and imports; only in the case of Hungary does FDI not stimulate foreign trade, the value of imports and exports is correlated with value of FDI inflow, as far as statistics are concerned, there is a significant inter-dependence between the inflow of FDI to V4 countries and the geographical and commodity pattern of their foreign trade. The scale and structure of FDI in the V4 requires further study. It is also important to examine the number and value of greenfield investment projects, as well as mergers and acquisitions (brownfield investment). This article attempts a holistic approach to the relationship between capital inflows in the form of foreign direct investment (FDI) and foreign trade of the host country, both export and import.

Suggested Citation

  • Wojciech Zysk & Sławomir Śmiech, 2014. "The Influence of Foreign Direct Investment on Foreign Trade in the Visegrad Countries from 2001 to 2011," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 2(3), pages 7-18.
    • Handle: RePEc:krk:eberjl:v:2:y:2014:i:3:p:7-18
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    File URL: http://eber.uek.krakow.pl/index.php/eber/article/download/49/50
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    References listed on IDEAS

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    1. Andrzej Cieślik, 2009. "Foreign direct investment and the volume of trade: the case of Poland," Economic Change and Restructuring, Springer, vol. 42(4), pages 273-291, November.
    2. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
    3. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004. "FDI and economic growth: the role of local financial markets," Journal of International Economics, Elsevier, vol. 64(1), pages 89-112, October.
    4. Gábor HUNYA & Sándor RICHTER, 2011. "Mutual trade and investment of the Visegrad countries before and after their EU accession," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 2, pages 77-91, December.
    5. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    6. Marzenna Weresa, 2001. "The Impact of Foreign Direct Investment on Poland's Trade with the European Union," Post-Communist Economies, Taylor & Francis Journals, vol. 13(1), pages 71-83.
    7. Lukasz Ambroziak, 2012. "FDI and intra-industry trade: theory and empirical evidence from the Visegrad Countries," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 180-198.
    8. Ali M Kutan & Goran Vukšić, 2007. "Foreign Direct Investment and Export Performance: Empirical Evidence," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(3), pages 430-445, September.
    9. Shiva S. Makki & Agapi Somwaru, 2004. "Impact of Foreign Direct Investment and Trade on Economic Growth: Evidence from Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 795-801.
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    Cited by:

    1. A. S. Chetverikova, 2019. "Foreign Trade Relations of the Visegrad Group: the Transformation of the Role of the Russian Federation," Outlines of global transformations: politics, economics, law, Center for Crisis Society Studies, vol. 12(2).

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    More about this item

    Keywords

    foreign direct investment (FDI); international trade; gravity model; Visegrad countries (V4);
    All these keywords.

    JEL classification:

    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F10 - International Economics - - Trade - - - General

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