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The Impact of FDI on EU Export Performance in Manufacturing and Services. A Dynamic Panel Data Approach

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  • Oana Cristina POPOVICI

    (Institute for Economic Forecasting, Romanian Academy, Romania)

Abstract

The purpose of this paper is to explain the export capacity in the EU countries based on FDI and domestic investment. We are interested to emphasize whether FDI contribute to export growth or the export performance is mainly explained by the domestic efforts. In this respect, we employ a dynamic panel data model using the GMM approach in the EU member states during the period from 1999 to 2012. As compared to other similar studies, our analysis checks for differences regarding the impact of FDI on trade in both the manufacturing and the services sectors. Also, the countries’ sample is divided into two groups: the new EU member states, which share a common history of economic transition, and the old EU member states, usually the most developed in the EU. In this way, we identify the potential disparities in the types of FDI and are able to suggest how public policies should be designed in order to foster both FDI and exports. Our empirical results suggest that the effect of FDI on exports is different depending on the group of countries and the type of economic activity.

Suggested Citation

  • Oana Cristina POPOVICI, 2018. "The Impact of FDI on EU Export Performance in Manufacturing and Services. A Dynamic Panel Data Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 108-123, December.
    • Handle: RePEc:rjr:romjef:v::y:2018:i:1:p:108-123
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    Cited by:

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    2. Thomas von Brasch & Ivan Frankovic & Eero Tölö, 2021. "Corporate taxes, investment and the self-financing rate. The effect of location decisions and exports," Discussion Papers 955, Statistics Norway, Research Department.
    3. Monica RAILEANU SZELES & Corina SAMAN, 2020. "Globalisation, Economic Growth and COVID-19. Insights from International Finance," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 78-92, September.
    4. Gupta, Shagufta & Ghosh, Poulomi & Sridhar, V., 2022. "Impact of data trade restrictions on IT services export: A cross-country analysis," Telecommunications Policy, Elsevier, vol. 46(9).
    5. Radulescu Magdalena & Cirstea Cornelia Gabriela & Belascu Lucian Aron, 2020. "FDIs and Commercial Balance in CEE Countries - Special Focus on the Manufacturing Economic Sectors. A VAR Analysis," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 13(2), pages 7-18, September.
    6. Yongrong Xin & Aftab Hussain Tabasam & Zhenling Chen & Aysha Zamir & Carlos Samuel Ramos-Meza, 2024. "Analyzing the Impact of Foreign Direct Investment, Energy Consumption on Services Exports, and Growth of the Services Sector: Evidence from SAARC Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 5709-5728, June.
    7. Ion Panescu & Nicoleta-Elena Cristea, 2024. "An Analysis Of Trade Balance And Main Activities Of Romanian Subsidiaries Of Transnational Companies During The Period 2014-2022," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 169-178, April.
    8. Radovan Kastratović, 2023. "Exporting decision of agricultural firms: The role of foreign direct investment," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 960-984, October.
    9. Aleksandra Kordalska & Magdalena Olczyk, 2019. "Is Germany A Hub Of Factory Europe For Cee Countries? The Sink Approach In Gvc Decomposition," GUT FME Working Paper Series A 56, Faculty of Management and Economics, Gdansk University of Technology.
    10. Radovan Kastratović, 2020. "The impact of foreign direct investment on host country exports: A meta‐analysis," The World Economy, Wiley Blackwell, vol. 43(12), pages 3142-3183, December.

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    More about this item

    Keywords

    exports; foreign direct investment; dynamic panel data; GMM; public policies;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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