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Foreign Direct Investment and Trade

Author

Listed:
  • Kofi Aaron A-O Agyei-Henaku
  • Charlotte Badu-Prah
  • Akua Agyeiwaa-Afrane
  • Ferguson K. Gidiglo
  • Francis Y. Srofenyoh
  • Justice G. Djokoto

Abstract

Eastern Europe experienced a surge in trade and capital movements after the introduction of the market economy. We investigate the substitution and complementary effect of foreign direct investment (FDI) and trade in the agricultural sector in Eastern Europe. We employed panel data from 1995 to 2020 for the 23 countries and fitted these to fixed and random effects estimators. We found that inward FDI did not influence trade. Outward FDI substituted exports and trade openness in the transition countries of Eastern Europe. However, outward FDI complemented imports and trade openness in Eastern Europe.

Suggested Citation

  • Kofi Aaron A-O Agyei-Henaku & Charlotte Badu-Prah & Akua Agyeiwaa-Afrane & Ferguson K. Gidiglo & Francis Y. Srofenyoh & Justice G. Djokoto, 2024. "Foreign Direct Investment and Trade," EERI Research Paper Series EERI RP 2024/04, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2024_04
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    References listed on IDEAS

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    More about this item

    Keywords

    Complement; Eastern Europe; foreign direct investment; substitute; transition economies.;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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