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Home Country Trade Effects of Outward FDI: an analysis of the Portuguese case, 1996-2007

Author

Listed:
  • Miguel Fonseca

    (University of Porto – Faculty of Economics)

  • António Mendonça

    (Technical University of Lisbon – School of Economics and Business Administration)

  • José Passos

    (Technical University of Lisbon – School of Economics and Business Administration)

Abstract

Given the increased internationalisation of the Portuguese economy through outward Foreign Direct Investment (FDI), particularly on the Portuguese-speaking countries, our main objective is to discuss the empirical relationship between this outward FDI and trade. We use panel data analysis within a framework of gravity equations for exports and imports, with a sample composed by EU-15, U.S.A., Brazil, Angola, Japan and China, for the period 1996-2007. Our main conclusion is that the empirical evidence for Portugal is consistent with a substitution hypothesis between direct investment abroad and trade, and consequently we detect a negative trade balance effect with the majority of countries in our sample, excepting Angola and, in a lesser extension, Spain.

Suggested Citation

  • Miguel Fonseca & António Mendonça & José Passos, 2010. "Home Country Trade Effects of Outward FDI: an analysis of the Portuguese case, 1996-2007," FEP Working Papers 365, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:365
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    File URL: http://www.fep.up.pt/investigacao/workingpapers/10.03.01_wp365.pdf
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    Cited by:

    1. Vera Silva & Rosa Forte, 2018. "The Impact of Foreign Direct Investment on Home Country Exports," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 9(01n02), pages 1-22, February.

    More about this item

    Keywords

    Foreign Direct Investment; Trade; Gravity Model; Portugal;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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