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The Relationship Between Trade and Foreign Investment: Empirical Results for Taiwan and South Korea

Author

Listed:
  • Li-Gang Liu

    (The World Bank)

  • Edward M. Graham

    (Peterson Institute for International Economics)

Abstract

This paper presents empirical evidence for Taiwan and Korea bearing on whether outward foreign direct investment (FDI) and international trade of these nations are substitutes or complements, i.e., whether a greater stock of FDI held by a nation is associated with decreases or increases of its exports and imports. This is an issue that has long concerned policymakers in the large industrial nations, who have worried about possible negative effects of outward FDI upon the nation's balance of payments and employment of its work force. Thus, a number of empirical studies have been published regarding this issue for these countries, but not for developing or newly industrializing countries.

Suggested Citation

  • Li-Gang Liu & Edward M. Graham, 1998. "The Relationship Between Trade and Foreign Investment: Empirical Results for Taiwan and South Korea," Working Paper Series WP98-7, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp98-7
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    1. repec:zbw:rwirep:0084 is not listed on IDEAS
    2. Tosin K. Gbadegesin & Nadege D. Yameogo, 2024. "Evaluating the Economic Impacts of the G20 Compact Initiative: Evidence from Causal Inference Using Advanced Machine Learning Techniques," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 17(5), pages 1-56, September.
    3. Hande Aksoz Yilmaz, 2021. "A Comparative Analysis of the Effect of Migration and Foreign Direct Investment on Trade in the Context of the Factor Mobility," Journal of Social Policy Conferences, Istanbul University, Faculty of Economics, vol. 0(81), pages 127-150, December.
    4. Nagesh Kumar, 2006. "Emerging Multinationals : Trends, Patterns and Determinants of Outward Investment by Indian Enterprises," Microeconomics Working Papers 22108, East Asian Bureau of Economic Research.
    5. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2009. "Trade-FDI Linkages in a System of Gravity Equations for German Regional Data," Ruhr Economic Papers 84, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Pradhan, Jaya Prakash, 2007. "How Do Indian Multinationals Affect Exports from Home Country?," MPRA Paper 19022, University Library of Munich, Germany.
    7. Lin, Jeng-Bau & Fu, Shan-Heng, 2016. "Investigating the dynamic relationships between equity markets and currency markets," Journal of Business Research, Elsevier, vol. 69(6), pages 2193-2198.
    8. Amadou Maiga Ousseini & Oumarou Issoufou & Coulibaly Salifou Kigbajah, 2019. "Foreign Direct Investment and International Trade in WAEMU- Panel Causality and Long-term Relationship Analysis," Review of Economics, De Gruyter, vol. 70(2), pages 193-212, August.
    9. Timo Mitze & Björn Alecke & Gerhard Untiedt, 2009. "Trade-FDI Linkages in a System of Gravity Equations for German Regional Data," Ruhr Economic Papers 0084, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    10. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany.
    11. Leandro Rothmuller, 2003. "Does FDI Matter for Trade in Brazil? An Application of the Gravity Model," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] c71, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    12. Kiran Sharma & Anindya S. Chakrabarti & Anirban Chakraborti, 2018. "Multi-layered Network Structure: Relationship Between Financial and Macroeconomic Dynamics," Papers 1805.06829, arXiv.org, revised Mar 2019.

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