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A Panel Data Analysis on FDI and Exports

Author

Listed:
  • Martin Falk

    (WIFO)

  • Mariya Hake

    (WIFO)

Abstract

The paper investigates the link between exports and the outward FDI stock using a panel of industries and seven EU countries for the period 1973–2004. In particular, we use the panel causality tests developed by Holtz-Eakin, Newey, and Rosen (1988). Estimates using system GMM estimators show that exports cause FDI but not vice versa. The long-run elasticity of the outward FDI stock with respect to exports is 0.78 and highly significant. Separate estimates by destination country yield the same result that exports cause outward FDI but the effect is only significant for the CEE countries and other developed countries (i.e., USA, Japan, Canada, Switzerland, Norway, etc.).

Suggested Citation

  • Martin Falk & Mariya Hake, 2008. "A Panel Data Analysis on FDI and Exports," WIFO Studies, WIFO, number 34229.
    • Handle: RePEc:wfo:wstudy:34229
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    References listed on IDEAS

    as
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    Cited by:

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    2. Chakraborty Debashis & Mukherjee Jaydeep & Lee Jaewook, 2017. "FDI Inflows Influence Merchandise Exports? Causality Analysis for India over 1991-2016 : Causality Analysis for India Over 1991–2016," Global Economy Journal, De Gruyter, vol. 17(3), pages 1-10, September.
    3. Batrancea Ioan & Rathnaswamy Malar Mozi & Gaban Lucian & Fatacean Gheorghe & Tulai Horia & Bircea Ioan & Rus Mircea-Iosif, 2020. "An Empirical Investigation on Determinants of Sustainable Economic Growth. Lessons from Central and Eastern European Countries," JRFM, MDPI, vol. 13(7), pages 1-24, July.
    4. Lenuta CARP (CEKA), 2014. "Determinants Of Foreign Direct Investments In Romania," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 5, pages 197-202, November.
    5. Miroslav Mateev & Iliya Tsekov, 2014. "Are there any top FDI performers among EU-15 and CEE countries? A comparative panel data analysis," Financial Theory and Practice, Institute of Public Finance, vol. 38(3), pages 337-374.
    6. Prajukta Tripathy & Pragyanrani Behera & Bikash Ranjan Mishra, 2023. "Study of linkages between productivity, export, and outward foreign direct investment: An empirical perspective of Indian manufacturing industries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1527-1548, April.
    7. Thomas Url, 2016. "Gesamtwirtschaftliche Auswirkungen der Exportgarantien in Österreich," WIFO Studies, WIFO, number 58839.

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    Keywords

    FIW Foreign Direct Investment;

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