Trade,foreign direct investments (FDI) and income inequality: Empirical evidence from transition countries

The aim of the article is to verify whether trade and inward foreign direct investments (FDI) may affect income distribution in a sample of 17 Transition Countries (TCs) over the period 1990–2006. In line with most of the previous literature, FDI do not have significant effects on income inequalities, whereas trade, especially when occurs with developed countries, seems to be more relevant. Different results are found when we take into consideration the educational system which represents an important channel through which FDI and trade may affect inequality.     

Modes of Foreign Direct Investment and Patterns of Trade: An Alternative Empirical Approach

Modes of FDI can be clarified by analysing the changing patterns of trade among host, home and third countries. However, most empirical experiments of foreign direct investment (FDI) determinants have been confined to general characteristics of host countries and multinational enterprises' outward investment activities. This may not clearly characterise the specific characteristics of inward FDI in regard to the host country. Thus, we introduce an alternative approach to clarify modes of FDI by investigating the link between patterns of trade and inward FDI. To empirically test whether our approach is applicable, we choose China during the period 1998–2007. We construct a modified gravity equation of bilateral trade while considering spatially lagged interdependence between host, home and third countries. The problem of endogeneity is controlled by applying the system generalised method of moments (GMM) estimation technique. Our findings are consistent with results in existing studies on modes of outward FDI to China and prove that our approach in dealing with the link between patterns of trade and inward FDI has wide applicability to all modes of FDI. We discover there is strong evidence for statistically significant complementarity between bilateral trade and inward FDI within the aggregate trade data. As we decompose the aggregate trade data into final and intermediate goods, we find the motivation concerning export‐platform and complex vertical FDI is very significant. In addition, as we separate the bilateral partners into developing partners and developed partners, we find both bilateral and multilateral linkages are much stronger with developing partners.     

欧盟在华直接投资对中国与欧盟贸易的影响

本文运用面板数据的方法,研究了欧盟在华直接投资对中国与欧盟贸易的影响,结论表明,欧盟在华直接投资促进了中国对欧盟各成员国的进出口贸易,但影响较小,影响中、欧贸易的主要因素是中国和欧盟各成员国的经济实力(GDP)。这表明欧盟在华投资企业的市场战略主要是针对中国广阔的国内市场的。文章最后部分对如何促进欧盟对华直接投资和扩大中、欧贸易提出了建议。     

外商直接投资对中国商品进出口影响的实证分析

本文采用贸易引力模型,结合混合回归分析与横截面分析两种方法,对1992年至2004年外商对华直接投资对中国商品进出口、出口、进口的影响进行了实证分析。混合回归结果表明,外商对华直接投资对中国商品进出口、出口、进口的增长均存在长期且显著的促进作用,而且这种促进作用存在时滞。横截面分析结果表明,每年外商对华直接投资对于中国商品进出口、出口、进口的促进作用随着时间的推移是波动的,但从总趋势来看,这种促进作用在不断增强。     

Impact of Openness on Growth in Different Country Groups

This paper evaluates the impact of openness on growth in different country groups using a panel of 79 countries over the period 1970–98. It distinguishes itself from many existing studies in three aspects: Firstly, both trade and FDI are included as measures of openness. Secondly, countries are classified into high‐, middle‐ and low‐income groups to compare the roles of trade and FDI in these groups. Thirdly, the possible problems of endogeneity and multicollinearity of trade and FDI are carefully dealt with in a panel data setting. The main findings are as follows. Total trade has a general positive impact on growth in all country groups, although the impact from imports is not significant in high‐income countries. FDI has a positive impact on growth in high‐ and middle‐income countries, but not in low‐income countries. With the existing absorptive capabilities, low‐income countries can benefit from both exports and imports, but not from FDI. These findings suggest that trade and FDI affect growth through different channels and under different conditions. The paper also discusses important policy implications.     

外商直接投资对我国地区收入差距的影响分析

本文利用1987²010年间的省际面板数据,在人力资本、产业结构、固定资产投资、对外贸易等控制变量的基础上,检验了外商直接投资(FDI)对地区间收入差距和城乡间收入差距的影响。实证结果显示:FDI对地区间收入差距一直表现为正的效应,且FDI与地区间收入差距不存在倒U形关系;然而,FDI与城乡间收入差距存在倒U形关系,即FDI的进入先是加剧了城乡间收入差距,但随着时间推移,FDI却对城乡间收入差距起弥合作用。     

论内向型FDI与国际贸易的关系——中国作为东道国的面板数据分析

本文运用固定影响变截距模型,采用1992-2004年我国作为东道国,香港特区、韩国、日本、美国、我国台湾地区、新加坡和德国等七个对中国直接投资最多的国家或地区的面板数据,对我国内向型FDI与国际贸易的关系进行了实证研究。研究结果表明,我国的内向型FDI与国际贸易之间具有显著的互补性,而且内向型FDI对我国的出口具有正的滞后效应。     

On the Irrelevance of Mercosur: Evidence From Foreign Direct Investment

ABSTRACT

This article utilizes data from more than 100 countries over 30 years to identify the key factors that make a country more attractive to foreign direct investment (FDI). We find evidence that a country's potential marginal returns to capital, available infrastructure, degree of trade openness, labor force qualification, and macroeconomic stability have a positive impact on FDI inflows. Our estimates capture a change in the role played by trade protection and an increase in the importance of human capital as globalization progressed. An application of our models illustrates why Mercosur countries have underperformed their peers in attracting FDI.     

Firm-level export duration: The importance of market-specific ownership linkages

This paper explores the impact of a firm's market-specific ownership linkages and trade complementarities on different dimensions of its exporting longevity. Unlike previous studies that were mostly based on country-product-level data, this paper uses transaction-level trade data on the population of firms in Slovenia in the 2002–11 period, matched with detailed origin/direction of inward/outward FDI information to determine a firm's integration in international production networks. Our results indicate that firm's bilateral inward and outward FDI flows with an export-destination country have a strong positive effect on a firm's export survival in that market. Importance of market-specific ownership linkages for export duration is exclusively driven by intermediate goods which suggests prolonged export duration through production network involvement. However, the perseverance effect of bilateral FDI ties on export spells has been weakened during the crisis period. We find pronounced market- and product-related trade complementarities as either exporting or importing experience with the relevant market/product substantially improves the chances of a product–market export spell continuing. Finally, the risk of exports termination is lower for a firm's core export products.     

Foreign Direct Investment Policy–Friendly Business Environment in R&D Sectors: Baltic States versus Visegrad Countries

This article examines the impact of foreign direct investment (FDI) policy on inward FDI in the Visegrad and Baltic countries. The analysis of business environment highlights that the countries in both regions attempt to create a friendly business environment by means of similar methods. However, the countries in both regions focus on fiscal incentives such as taxes, which do not play a major role in attracting inward FDI in R&D. The results of attracting FDI are better in the Visegrad countries, which implement financial incentives toward inward FDI along with fiscal incentives. According to empirical analysis, it is noticed that a higher intervention level and a higher support level guarantee the volume of inward FDI. The country's introduced FDI policy enables it to orient industry and to implement economic strategic targets. FDI policy does have an impact on promoting the development of the entire country.     

Global value chains and inward foreign direct investment in the 2000s

In this paper, we make use of recent data published by the World Input‐Output Database to: (i) provide evidence on trade in value added of the major Organization for Economic Co‐operation and Development (OECD) member countries and major emerging economies (designated by OE country group), namely by measuring the degree of participation in global value chains (GVCs) at the country and sectoral levels; and (ii) estimate whether the GVC participation of OE countries has positively influenced foreign direct investment (FDI) inward stocks in the 2000s. The pooled regression model estimated shows that the country′s degree of GVC participation has contributed positively for bilateral FDI inward stocks, after controlling for other possible FDI determinants.     

Reverse importing and asymmetric trade and FDI: a networks explanation

This paper considers the impact of business and social networks on international trade and FDI. I propose that differences in the strength of network effects across countries can produce asymmetric trade and investment flows that may lead to trade friction. A firm from a country with strong network effects has a cost advantage in selling to buyers from its own country. This advantage results in lower inward FDI, lower total imports but larger volumes of reverse imports into the country with strong network effects. The model’s predictions match observed asymmetric trade and investment flows that sometimes lead to US-Japan trade friction.     

外国直接投资与我国进出口贸易的关系——基于不同贸易方式的实证分析

本文运用协整方法和误差修正模型,根据我国1981-2004年的统计数据,考察了我国吸收的外国直接投资对不同贸易方式下的对外贸易产生的不同影响。结果表明:从长期看,外国直接投资与加工贸易进出口之间存在长期均衡关系,而与一般贸易进出口之间不存在长期均衡关系;从短期看,外国直接投资对加工贸易进出口都具有促进作用,而一般贸易进出口对外国直接投资的变动反应不敏感。     

Intellectual Property Rights,FDI, R&D and Economic Growth: A Cross‐country Empirical Analysis

This paper aims to empirically examine how intellectual property rights (IPRs) protection, foreign direct investment (FDI) and research and development (R&D), along with other possible variables, may affect the economic growth of the host country. Using the panel data of 92 countries during 1970–2007, I conclude from the system generalised method of moments estimation that domestic investment share, FDI, R&D capacity, openness to trade, human capital and IPRs protection all have statistically significant and positive impacts on economic growth. A further investigation of countries at different levels of development suggests two striking findings. First, besides the domestic investment, openness, human capital and IPRs protection, R&D is the key to drive economic growth in the higher‐income countries, while FDI is the engine of growth in both higher‐income and middle‐income countries. Second, a positive and significant impact of IPRs protection on economic growth is found in both higher‐income and lower‐income countries. However, such an impact is not detected in the middle‐income countries.     

贸易投资一体化背景下FDI对美中贸易逆差的影响:理论分析与实证检验

本文从贸易投资一体化的角度,通过关于"中美贸易不平衡问题产生的原因"的理论分析和"美国在华直接投资的贸易效应"的格兰杰因果检验,探讨了FDI对美中贸易逆差的影响。研究指出,中美贸易不平衡问题产生的原因是多方面的:贸易投资一体化条件下国际分工的利益分配、美国等发达国家跨国公司在华投资的规模、结构及其产生的贸易效应等都是形成美中贸易逆差的重要原因,而统计误差则放大了中美之间的贸易失衡。在实证检验中,本文采取对全样本(1985-2007)和子样本(2003:1-2008:1)分别进行回归并加以比较的分析方法,找出了结构突变的原因。实证检验的结果和理论分析的结果是一致的:美国在华直接投资与中国对美国出口之间存在双向的因果关系,即相互影响。     

Determinants of Bilateral Trade Flows in OECD Countries: Evidence from Gravity Panel Data Models

This paper aims to identify the main causes of bilateral trade flows in OECD countries. The specific features of the study include the explicit introduction of R&D and FDI as the two important explanatory variables, conduct of unit root tests in the panel data framework and careful consideration of endogeneity. The main findings are that the levels and similarities of market size, domestic R&D stock and inward FDI stock are positively related to bilateral trade, while the distance, measured by both geographical distance and relative factor endowment, between trade partner countries has a negative impact. These findings lend support to new trade, FDI and new growth theories.     

Host market characteristics,FDI, and the FDI – trade relationship

This paper empirically examines how a host nation's market characteristics, particularly its market maturity and role as an export platform, affect the amount of inward FDI it receives and its FDI?–?bilateral trade relationship with the FDI source. For the period 1989?–?1999, using Japanese outward FDI into 85 geographically and developmentally diverse countries, we find a positive and significant relationship between FDI inflows and the host's market maturity levels. However, the FDI?–?trade interaction between the host and the FDI source appears to vary inversely with the host country's market maturity level. In addition, after controlling for the host's market maturity, we find that the nature of the host's ‘export platform’ status also significantly impacts both inward FDI flows and the FDI?–?trade relationship.     

Trade in Services and TFP: The Role of Regulation

What determines total factor productivity (TFP) growth in services: is it services trade or services–trade regulation? To respond to this question, we use four indicators of international trade in services since 1990 to 2005, namely foreign direct investment (FDI) inward stock, services imports, domestic sales of foreign affiliates (FATS) and FDI inflows, to examine what type of services trade forms a direct determinant. Subsequently, we analyse what type of sector‐specific regulation has played an inhibiting effect on services TFP growth. Such analysis contrasts with former studies in which mainly factor inputs and economy‐wide regulation are used to explain services TFP. This paper provides evidence that neither trade nor entry barriers are robust determinants to explain cross‐country differences. Instead, regulations on operational procedures affecting the variables costs structure of the firm seem to play a more important role in explaining TFP growth between countries, particularly in combination with information and communication technology (ICT) capital.     

FDI as an outcome of the market for corporate control: Theory and evidence

Much foreign direct investment (FDI) takes the form of mergers and acquisitions (M&A). It is commonplace in finance to view acquisitions as manifestations of the market for corporate control. Following on that insight we propose a model of FDI in which headquarters bid to control overseas assets. We derive an equation for bilateral FDI stocks that resembles the recently developed fixed effects approach to modelling bilateral trade flows. We estimate the model and use its parameters to construct benchmarks for evaluating multilateral inward and outward FDI.     

Institutional determinants of inward FDI: Evidence from Pakistan

FDI has been growing at a spectacular pace all over the world and emerging countries have been successful in attracting more FDI compared to developed countries. Institutional factors are becoming more important as determinants of inward FDI for emerging markets. However, research in this area is inadequate and also incosnsistent in terms of findings. In this paper, we have examined the institutional determinants of Pakistani FDI inflows and also examined the relative importance of those factors. The paper has found that certain institutional determinants such as size of the government, legal structure and strong property rights, freedom to trade and civil liberty have strong positive effect on FDI inflows. Among the institutional variables, regulation has been found to be most important to influence inward FDI flow to Pakistan. The paper has also found evidence that there was a structural break in FDI flows in Pakistan which coincides with market liberalization programme in early 1990s. This confirms the effectiveness of conducive institutional environment to attract foreign investment. Moreover, we have found that military government is more successful in attracting FDI compared to democratic government in Pakistan.