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Export performance and and the role of foreign direct investment

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  • Nigel Pain

Abstract

This paper explores the relationship between the location of production and the trade performance of 11 OECD countries since 1971. The paper augments a standard export demand model, which includes relative prices, market size and measures of relative innovation, with indicators of both inward and outward investment levels. Common long-run parameters are accepted for market size, relative prices and relative patenting, but not for the direct investment effects. The sign and magnitude of the direct investment effects vary by country. Outward investment has a generally negative impact on trade shares, while inward investment has a generally positive one.

Suggested Citation

  • Nigel Pain, 1997. "Export performance and and the role of foreign direct investment," National Institute of Economic and Social Research (NIESR) Discussion Papers 131, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:131
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    Cited by:

    1. Jungnickel, Rolf & Keller, Dietmar, 2003. "German FDI and Integration of Production in the EU," Discussion Paper Series 26376, Hamburg Institute of International Economics.
    2. José Pedro Pontes, 2004. "A theory of the relationship between foreign direct investment and trade," Economics Bulletin, AccessEcon, vol. 6(2), pages 1-8.
    3. Kateřina Šmídková & Aleš Bulíř, 2004. "Would Fast Sailing towards the Euro Be Smooth? What Fundamental Real Exchange Rates Tells Us about Acceding Economies," Working Papers IES 64, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
    4. Amiti, Mary & Wakelin, Katharine, 2003. "Investment liberalization and international trade," Journal of International Economics, Elsevier, vol. 61(1), pages 101-126, October.
    5. Apanisile Olumuyiwa Tolulope & Okunlola Charles Olalekan, 2017. "Growth Effect of Export Promotion on Non-oil Output in Sub-Saharan Africa (1970–2014)," Emerging Economy Studies, International Management Institute, vol. 3(2), pages 139-155, November.
    6. Le Thanh THUY, 2007. "Does Foreign Direct Investment Have an Impact on the Growth in Labor Productivity of Vietnamese Domestic Firms?," Discussion papers 07021, Research Institute of Economy, Trade and Industry (RIETI).
    7. Mohamed Saadi, 2011. "Technology Transfer, Foreign Direct Investment, Licensing and the Developing Countries’ Terms of Trade," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 5(4), pages 381-420, November.
    8. Gu, Weishi & Awokuse, Titus O. & Yuan, Yan, 2008. "The Contribution of Foreign Direct Investment to China's Export Performance: Evidence from Disaggregated Sectors," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6453, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Pontes, Jose Pedro, 2007. "A non-monotonic relationship between FDI and trade," Economics Letters, Elsevier, vol. 95(3), pages 369-373, June.
    10. Mahmoud M. Sabra, 2021. "The Nexus Relationship between Exports and Government size Dynamic Panel Evidence from the MENA Region," GATR Journals jber209, Global Academy of Training and Research (GATR) Enterprise.
    11. Keller, Dietmar & Jungnickel, Rolf, 2003. "German FDI and Integration of Production in the EU," HWWA Discussion Papers 232, Hamburg Institute of International Economics (HWWA).
    12. Martin Falk & Hannes Leo, 2004. "Die Innovationsaktivitäten der österreichischen Unternehmen. Empirische Analysen auf Basis der Europäischen Innovationserhebung 1996 und 2000," WIFO Studies, WIFO, number 25249, March.
    13. Gursoy, Guner, 2009. "A strategic shift of automobile manufacturing firms in Turkey," MPRA Paper 20233, University Library of Munich, Germany.
    14. Bettina Becker & Nigel Pain, 2008. "What Determines Industrial R&D Expenditure In The Uk?," Manchester School, University of Manchester, vol. 76(1), pages 66-87, January.
    15. Maria Rosaria Alfano, 2005. "Tax Competition in EU implies EMTR different: some effects on FDI and Economic Growth Rate," Public Economics 0510015, University Library of Munich, Germany.
    16. Bernardina Algieri, 2011. "Modelling export equations using an unobserved component model: the case of the Euro Area and its competitors," Empirical Economics, Springer, vol. 41(3), pages 593-637, December.
    17. repec:ebl:ecbull:v:6:y:2004:i:2:p:1-8 is not listed on IDEAS
    18. Velu Suresh Kumar, 2022. "Relationship Between FDI Inflows and Export: The Case of India," Shanlax International Journal of Economics, Shanlax Journals, vol. 11(1), pages 18-25, December.
    19. Petr Kral, 2004. "Identification and Measurement of Relationships Concerning Inflow of FDI: The Case of the Czech Republic," Working Papers 2004/05, Czech National Bank.
    20. Branstetter, Lee G. & Kwon, Namho, 2018. "South Korea's transition from imitator to innovator: The role of external demand shocks," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 28-42.
    21. Jose Pedro Pontes, 2006. "FDI and trade: complements and substitutes," Working Papers Department of Economics 2006/03, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    22. Elvira Sapienza, 2009. "The interaction between Export and FDI: Central-Eastern Europe and EU15," Quaderni DSEMS 13-2009, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.

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