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Structure and dynamics of global capital and international trade: Analysis of the relationship between exports and foreign direct investment (FDI) from 2001 to 2006

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  • Tingting Xiong
  • Hao Sun

Abstract

This article attempts to explore the empirical evidence for the linkage between exports and foreign direct investment (FDI) by examining its relationship with over 140 countries from 2001 to 2006. Through using the comprehensive bilateral cross‐country panel exports and FDI data set for the first time, this article provides more insights about the relationships between exports and FDI with developed–developed country pairs as well as with developed–developing country pairs, respectively. By applying augmented gravity models, this article justifies that exports and FDI are complementary as previous studies posit. Furthermore, such complementary relationship is more positive and significant with developed–developing country pairs when compared to other combinations (developed–developed and developing–developing pairs). To be more specific, FDI from developed to developing countries promotes more exports, while FDI from developed countries to developed countries is less important in promoting exports.

Suggested Citation

  • Tingting Xiong & Hao Sun, 2021. "Structure and dynamics of global capital and international trade: Analysis of the relationship between exports and foreign direct investment (FDI) from 2001 to 2006," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 542-559, January.
    • Handle: RePEc:wly:ijfiec:v:26:y:2021:i:1:p:542-559
    DOI: 10.1002/ijfe.1803
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    2. Bishwanath Goldar & Yashobanta Parida & Anindita Goldar, 2024. "Complementarity Versus Substitution Relationship between Outward FDI and Exports: Evidence from India," Journal of Asian Economic Integration, , vol. 6(1), pages 90-117, April.
    3. Adolfo Maza & Paula Gutiérrez-Portilla, 2022. "Outward FDI and exports relation: A heterogeneous panel approach dealing with cross-sectional dependence," International Economics, CEPII research center, issue 170, pages 174-189.
    4. Mohammad Razib Hossain, 2024. "Killing billions to save millions? Analyzing the double jeopardy of fossil-fuel-led economic development in Bangladesh," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 20679-20710, August.
    5. Bingqiang Li & Xi Li & Jinzhi Li & Hongchun Lin & Baojuan Rui, 2023. "Empirical Analysis of Export Tax Rebate on Inwards Foreign Direct Investment in China," SAGE Open, , vol. 13(4), pages 21582440231, December.

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