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The Impact of Foreign Direct Investment on Home Country Exports

Author

Listed:
  • Vera Silva

    (Faculty of Economics, University of Porto, Porto 4200-464, Portugal)

  • Rosa Forte

    (#x2020;CEF.UP — Center for Economics and Finance, Faculty of Economics, University of Porto, Portugal)

Abstract

Exports and foreign direct investment (FDI) are two alternative foreign markets entry modes. From a theoretical point of view, there are arguments which support two different relationships between FDI and exports: complementary and substitution. Most empirical studies, however, have concluded with a complementary relationship. Since existing studies at more disaggregated levels have focused solely on the manufacturing industry, this paper aims at studying the relationship between FDI and home country exports based on a large sample of Portuguese firms, belonging to manufacturing and services, for the period 2006–2012. Using a fixed-effects model, results obtained suggest that the control of heterogeneity between firms is essential to clarify the relationship between FDI and exports and this has been a factor often overlooked.

Suggested Citation

  • Vera Silva & Rosa Forte, 2018. "The Impact of Foreign Direct Investment on Home Country Exports," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 9(01n02), pages 1-22, February.
    • Handle: RePEc:wsi:jicepx:v:09:y:2018:i:01n02:n:s1793993318500059
    DOI: 10.1142/S1793993318500059
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    References listed on IDEAS

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    Keywords

    FDI; firm exports; Portugal;
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