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Estimating exports and imports demand for Manufactured goods: The role of FDI

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  • Mariam Camarero
  • Cecilio Tamarit

Abstract

In this paper we examine the joint performance of FDI and trade under a full liberalization process consistent with New Trade Theory models. The testing framework consists of the estimation of demand for exports and imports of manufactured goods for a panel containing the majority of the EU countries as well as the US and Japan. The model includes as explanatory factors, not only the traditional determinants of trade, but also new ones, such as the stock of foreign direct investment (FDI). We apply a variety of panel unit root and cointegration tests to the cases of both homogeneous and heterogeneous panels. Whereas there is no evidence of cointegration when using just the traditional formulation, the results are favorable to the existence of long-run relationships linking the variables of the augmented model. Moreover, the results point mainly to a complementarity relationship between trade and FDI.

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  • Mariam Camarero & Cecilio Tamarit, 2003. "Estimating exports and imports demand for Manufactured goods: The role of FDI," European Economy Group Working Papers 22, European Economy Group.
    • Handle: RePEc:eeg:euroeg:22
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    Cited by:

    1. Kichun Kang, 2012. "Is the "Houthakker-Magee" Finding Durable? Evidence from Disaggregated Trade Flows between China and Korea," Annals of Economics and Finance, Society for AEF, vol. 13(2), pages 299-316, November.
    2. Lundan, Sarianna M., 2007. "The Home Country Effects of Internationalisation," Discussion Papers 1100, The Research Institute of the Finnish Economy.
    3. Menzie Chinn, 2014. "Global supply chains and macroeconomic relationships in Asia," Chapters, in: Benno Ferrarini & David Hummels (ed.), Asia and Global Production Networks, chapter 8, pages 249-286, Edward Elgar Publishing.
    4. Keun Lee & Sanika Sulochani Ramanayake, 2018. "Adding-Up Problem and Wage–Productivity Gap in Exports of Developing Countries: A Source of the Middle-Income Trap," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(5), pages 769-788, December.
    5. Chinn, Menzie D., 2010. "Supply Capacity, Vertical Specialisation andTrade Costs: The Implications for Aggreagate US Trade Flow Equations," CAGE Online Working Paper Series 14, Competitive Advantage in the Global Economy (CAGE).
    6. Jelena Trivic & £ukasz Klimczak, 2015. "The determinants of intra-regional trade in the Western Balkans," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 33(1), pages 37-66.
    7. Juan Esteban Carranza & Alejandra González & Natalia Serna, 2014. "La relación entre la producción y el comercio exterior de la industria manufacturera colombiana (2000-2010)," Borradores de Economia 806, Banco de la Republica de Colombia.
    8. Stirböck, Claudia, 2006. "How strong is the impact of exports and other demand components on German import demand? Evidence from euro-area and non-euro-area imports," Discussion Paper Series 1: Economic Studies 2006,39, Deutsche Bundesbank.
    9. Raphaël Chiappini, 2016. "Do overseas investments create or replace trade? New insights from a macro-sectoral study on Japan," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(3), pages 403-425, June.
    10. Sourafel Girma, 2005. "Absorptive Capacity and Productivity Spillovers from FDI: A Threshold Regression Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(3), pages 281-306, June.
    11. Jaime Turrion & Carmela Martin, 2003. "Eastern Enlargement of the European Union and Foreign Direct Investment Adjustments," European Economy Group Working Papers 24, European Economy Group.
    12. Johnson, Andreas, 2006. "FDI and Exports: the case of the High Performing East Asian Economies," Working Paper Series in Economics and Institutions of Innovation 57, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    13. Mahmoud Mohammed Sabra, 2016. "Remittances Impact on Economic Growth, Domestic Savings and Domestic Capital at the Presence of ODA and FDI in Selected MENA Countries," International Journal of Regional Development, Macrothink Institute, vol. 3(2), pages 1-26, December.
    14. Menzie D. Chinn, 2005. "Supply Capacity, Vertical Specialization and Tariff Rates: The Implications for Aggregate U.S. Trade Flow Equations," NBER Working Papers 11719, National Bureau of Economic Research, Inc.

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