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The Impact of Foreign Direct Investment on Developing Countries' Terms of Trade

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  • Konstantin M. Wacker

Abstract

This paper first shows that important economic arguments in favor of the Prebisch-Singer hypothesis of falling terms of trade of developing countries have implicitly relied on the role of multinational corporations and foreign direct investment. As of yet, the relationship between the latter and terms of trade has not been empirically investigated. In order to start closing this gap in research, data on 111 developing countries between 1980 and 2008 is analyzed using panel data methods.

Suggested Citation

  • Konstantin M. Wacker, 2011. "The Impact of Foreign Direct Investment on Developing Countries' Terms of Trade," WIDER Working Paper Series wp-2011-006, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2011-006
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    6. Konstantin M. Wacker, 2016. "Do Multinationals Deteriorate Developing Countries' Export Prices? The Impact of FDI on Net Barter Terms of Trade," The World Economy, Wiley Blackwell, vol. 39(12), pages 1974-1999, December.

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