A multivariate cointegrated model testing for temporal causality between exports and outward foreign investment: the Spanish case

Historically, outward foreign direct investment has been contemplated as an alternative way of firms' internationalization. In this line, a relational substitution between exports and foreign direct investment would be expected. However, this seems to contrast with recent developments in the ‘new trade theory’ which show that the volume of trade and the emergence of multinational firms may be positively related one to the other. This paper investigates if some empirical evidence exists either supporting a substitution or a complementary relationship between both forms of internationalization. With this aim, an aggregate time series approach was adopted using quarterly aggregate data (seasonal adjusted) from the Spanish economy covering the period 1970.I–1992.III. A vector autoregressive model was employed for both multivariate cointegration analysis and Granger temporal causality testing. The strength and direction of causal relationships are shown through the dynamic variance decomposition and the impulse response technique. Once controlling for relative market size and prices, the results provide evidence of a positive long-term Granger causality going from foreign direct investment to exports, although not in the opposite direction.     

THE IMPACT OF FOREIGN CAPITAL ON MACROECONOMIC PERFORMANCE IN CENTRAL ASIA

This paper investigates the short‐run impact of shocks in international capital flows channeled through foreign direct investment (FDI) and foreign aid on national output and export performance in five Central Asian economies under a dynamic multivariate structural vector autoregressive (SVAR) framework. The identification of structural shocks is implemented by AB model based on IS‐LM‐BP postulates. The main message is that external capital shocks are persistent and small open economies are weak to absorb them. Overall, the aid shocks reduce national outputs, while FDI increase it, on average. The expansion of global demand (G20) leads to an increase in domestic GDPs, notably in Kazakhstan, Kyrgyzstan and Uzbekistan. The impact is augmented by a positive effect of FDI on export channel (and net exports) that shift the IS curve upwards. We cannot find any significant aid‐FDI nexus in the region, except in Kazakhstan. The structural variance decomposition (SFEVD) results suggest that external flows and foreign demand together explain the bigger part of variability in domestic GDP and exports. Finally, variations in foreign capital, aid and FDI, are mainly explained by series themselves. The role of domestic activities is found to be weaker for aid and greater for FDI. The results could be attributed to rigid exchange rates, high trade dependence, and necessity for foreign capital to explore natural resources in Central Asian region. Our results provide some valuable suggestions to improve an investment climate for boosting economic growth.     

中国企业对外直接投资与企业生产能力

随着中国企业对外直接投资(OFDI)规模的日益扩大,企业OFDI对企业生产能力的影响问题成为学者们研究的重点议题.本文基于2013—2018年的企业OFDI数据,使用倾向得分匹配法系统研究对OFDI活动对中国企业生产能力的作用结果.研究发现:OFDI活动与企业生产能力之间存在着显著的因果关系.不论是从短期还是长期来看,OFDI活动都会对企业的生产能力产生正向推动作用,同时这种推动作用还会随着时间的推移而不断提高.另外,本文还将OFDI活动划分为三大类,不同类型的OFDI活动对企业生产能力的影响中存在着较为显著的差异性.本文的研究结论为推动中国企业开展OFDI活动及相关政府管理部门制定管理政策,提供了重要的参考和借鉴.     

Some indicators of multinational domination of national economies: analysis for the UK and other developed countries

The paper starts by giving an overview of the foreign direct investment position, relative to the size of the domestic economy, for major developed western economies. It then develops the view that, in assessing the full impact of foreign direct investment on national economies, a global approach should be considered: such approach stresses the relevance of multinational spread of activities and the need to consider the cumulative effect of both outward and inward direct investment. This leads to the introduction of a ‘multinational domination ratio’ for national economies and to estimates of it for some main industrialized western economies over a 20-year period. A first attempt to use this global approach in order to assess the possible impact of UK foreign direct investment (both inward and outward) on trade leads to the computation of elasticities of trade with respect to foreign direct investment.     

THE IMPACT OF TRADE AND FOREIGN DIRECT INVESTMENT POLICIES ON TECHNOLOGY ADOPTION AND SOURCING OF CHINESE FIRMS

How do trade and foreign direct investment (FDI) policies impact the decisions of firms in technology adoption (process vs. product innovations) and sourcing (internal vs. external and foreign vs. domestic)? We use a sample of Chinese firms to address this question. China's trade and FDI policies lead to different forms of internationalization: ordinary exports, processing exports, majority FDI, and minority FDI. We find that both exporting and FDI stimulate process innovation; ordinary exports, processing exports, and FDI have strong, weak, and no effects on stimulating product innovation, respectively. Exporting firms source technologies both internally through R&D and externally from foreign and domestic sources. FDI firms have a lower tendency of internal technology development and domestic technology sourcing, but a much higher tendency of foreign technology sourcing than exporting firms. (JEL F13, F23, O32)     

国际化路径、技术创新与区域中小企业成长——基于省际面板数据的实证检验

利用2011-2015年中国省域层面的中小企业相关数据,构建了静态面板数据模型和动态面板数据模型,研究了中国区域中小企业的两条国际化路径(对外贸易和对外直接投资)对中小企业成长的影响,并探析了中小企业技术创新在对外贸易和对外直接投资影响中小企业成长过程中的中介作用。实证结果显示:中小企业对外贸易对中小企业成长具有显著的正向影响;中小企业对外直接投资对中小企业成长具有显著的负向影响;中小企业技术创新在中小企业国际化路径影响企业成长的过程中起中介作用。     

Scale economies,cost complementarities and technical progress in Indian banking: evidence from fourier flexible functional form1

The paper analyses the relations between foreign policy and export performance. The paper deals with exports of selected European countries and the USA to Middle Eastern countries including Israel. Cointegration analysis is used to identify common stochastic trends in export series. A long-term relationship implies no significant influence of foreign policy differences on trade performance. According to the Johansen tests applied to bivariate and multivariate models, German, Austrian, Dutch and EU exports to Israel are cointegrated with the US exports, while Swiss exports are never cointegrated with the exports of these countries. This result confirms the importance of foreign policy in trade performance.     

Foreign Debt,Foreign Direct Investment and Volatility

We investigate how foreign debt and foreign direct investment (FDI) affect the growth and welfare of a stochastically growing small open economy. First, we find that foreign debt influences the growth of domestic wealth by lowering the cost of capital, while FDI affects the country's welfare by providing an additional source of permanent income. Second, a decline in domestic investment may improve domestic welfare as FDI replaces the gap. Even when the welfare deteriorates, its magnitude is mitigated, leaving more room for discretionary fiscal policy. Third, a fiscal policy aimed to stabilize domestic output fluctuations needs to be conducted not to crowd out the welfare benefit of FDI too much. Fourth, an economy with both types of foreign capital experiences wider welfare swings by external volatility shocks than the one with foreign debt alone, while the welfare effects from domestic volatility shocks are mitigated. The welfare effects of fiscal shocks are much smaller with both types of foreign capital. Lastly, the first-best labor income tax covers the government absorption by the labor's share of total output, and the capital income tax covers the rest. Investment is penalized or subsidized depending on the social marginal cost-gain differential.     

The Cyclical Behavior of Net Exports: Temporary and Persistent Movements

This paper explores the empirical relationship of net exports, domestic output, and foreign output. It presents evidence supporting a consumption-smoothing motive for trade in goods. Classical models of the international macroeconomy typically allow for trade in claims on both home and foreign output. This paper lends empirical support to this setup by showing that highly transitory shocks to output cause net exports from the country experiencing the shock to rise. Persistent shocks have opposite effects—a result consistent with the role persistent shocks play in signaling future investment opportunities.     

对外直接投资的贸易效应研究--基于中国经验的实证分析

对外直接投资与出口贸易之间的关系一直是相关理论和实证研究的争论主题。运用引力模型,对中国FD I的贸易效应进行实证分析表明:中国对东道国的直接投资促进中国对东道国的出口,但对从东道国的进口却具有替代效应。因此,大力促进中国对外直接投资,是促进中国的对外出口、绕开东道国贸易壁垒的重要途径。     

Investment Cycles and Sovereign Debt Overhang

We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy, seeks to insure a risk-averse domestic constituency, and is more impatient than the market. Optimal policy generates long-run cycles in both sovereign debt and foreign direct investment in an environment in which the first best capital stock is a constant. The expected tax on capital endogenously varies with the state of the economy, and investment is distorted by more in recessions than in booms, amplifying the effect of shocks. The government's lack of commitment induces a negative correlation between investment and the stock of government debt, a "debt overhang" effect. Debt relief is never Pareto improving and cannot affect the long-run level of investment. Furthermore, restricting the government to a balanced budget can eliminate the cyclical distortion of investment.     

我国对外直接投资产业选择实证分析及优化措施

开展对外直接投资是我国在更高层次上参与国际分工、充分利用"两种资源"和"两个市场"的客观要求,基于Kojima模型,对我国对外直接投资产业选择与相应产业出口关系做出实证分析。分析表明,我国对外直接投资产业选择具有贸易导向型特征,其现状具有一定的不合理性。在此基础上,提出了优化我国对外直接投资产业选择的政策措施。     

INTERNATIONALIZATION STRATEGIES IN OLIGOPOLY WITH HETEROGENEOUS FIRMS

This paper examines the foreign direct investment (FDI) versus exports decision of foreign oligopolistic firms under cost heterogeneity. An additional motivation for firms to invest abroad is the technological sourcing via spillovers, which flow from the host more efficient firm to foreign less advantaged firms. For intermediate values of the set‐up costs associated with FDI entry, it is shown that foreign firms choose opposite entry strategies. An equilibrium where the less efficient foreign firm exports whereas the more efficient invests is more likely to happen when foreign firms become more heterogeneous, the larger the trade costs and not too big oligopolistic profitability. Interestingly, the opposite may also be an equilibrium thus finding that the more efficient firm does not choose to invest, a result that emphasizes the relevance of the strategic setting under consideration. The latter result identifies a market failure since welfare in the host market is higher when both firms undertake FDI; a finding that calls attention to how appropriate are host government policies towards internationalization strategies.     

The effect of the euro on aeronautic trade: A French regional analysis

After describing the spatial distribution of the aeronautic industry in France, this study analyzes the determinants of French regional bilateral exports and imports, according to a trade gravity model, for the period 2003–2010. The appreciation of the euro has a negative impact on exports and a positive effect on imports, confirming the fears of European politicians and managers in the aeronautic sector. The gravity equation, extended to integrate factor complementarities among partners, also shows that labor productivity levels in France and its partner countries are significant determinants of trade, supporting O-ring theory applied from Kremer (1993) to explicate trade in the aeronautical sector. The spatial organization of this sector is also analyzed via the impact of foreign military spending on French trade. Finally, by distinguishing French imports and arrivals of products manufactured in Europe and in France, supplementary estimations reveal that outward foreign direct investment FDI affects the imports and arrivals of European products negatively but has positive influences on the imports and arrivals of French products.     

Disentangling barriers to internationalization

Abstract. Recent literature on multinational firms has focused on low productivity as a barrier to the internationalization of firms. But labour market frictions or financial constraints may also hamper internationalization. In order to assess the importance of these barriers, we present new empirical evidence on the extensive and intensive margin of exports and foreign direct investment (FDI) based on micro‐level data of German firms. First, we find a positive impact of firm size and productivity on firms’ international activities. Second, labour market frictions can constitute barriers to foreign activities. Third, self‐reported financial constraints have no impact on firms’ internationalization decisions. JEL classification: F23, G2     

中国OFDI逆向技术溢出效应 的影响因素研究* ——基于国别面板数据的非线性门槛技术回归

本文首先对对外直接投资逆向技术溢出效应的机理进行了分析,然后以2003-2013年中国对外直接投资的13个主要发达国家的数据为样本,考察了中国对外直接投资逆向技术溢出效应的影响因素。本文的实证结果发现,中国与东道国之间的技术差距、东道国研发（R&D）支出、全要素生产率、人力资本、技术创新能力、制度环境是对外直接投资逆向技术溢出效应的正相关因素。同时,本文以技术差距作为门槛变量进行门槛效应检验,结果表明,技术差距存在单一门槛值,当中国与东道国之间技术差距较大时,技术差距对逆向技术溢出产生了正向影响;当技术差距缩小后,正相关关系仍然存在,但影响程度有所下降。     

Outward foreign direct investment and sovereign risks in developing host country

Outward foreign direct investment can affect developing, technology-receiving host countries mainly through tax revenue, technology spillover and the competition effect. With the consideration of these three effects of the outward foreign direct investment on host country, we develop a dynamic game model of interaction between foreign investors and host country from a dynamic perspective, to reveal the dynamic evolution mechanism of the sovereign risk faced by outward foreign direct investment. The result shows that: host governments usually give a specific tax holiday for outward foreign direct investors, and during the period of tax holiday investment decision of investors would be influenced by technology spillover effect, specifically, the greater the technology spillover the slower the growth of investment stock. Once the system reaches a stable state, the host country will impose a tax on multinational corporations. If the equilibrium tax rate of industries or regions which makes it easy to obtain technology spillover is high, then the equilibrium capital stock would be low.     

The impact of bilateral investment treaties on foreign direct investment

This paper uses a large panel of OECD data on stocks of outward foreign direct investment (FDI) to evaluate the impact of bilateral investment treaties. For several variants of the knowledge capital model of multinationals, we demonstrate that investment treaties exert a significant positive effect on outward FDI, if they actually are implemented. Moreover, even signing a treaty has a positive, although lower and in most specifications insignificant, effect on FDI. Journal of Comparative Economics 32 (4) (2004) 788–804.     

Foreign Direct Investment,Merchandise and Services Trade in a Transition Economy: The Case of Cambodia

Since the liberalization of trade and investment in the 1990s, inward foreign direct investment (FDI) has been seen to play a greater role in forging trade flows, integration into the regional and international markets and economic development for a transition economy such as Cambodia. Despite her recent progress in attracting FDI and fostering trade, the direction of causality between inward FDI, exports and imports of merchandise as well as services has not been empirically explored. The findings show that inward FDI not only can promote both merchandise and services exports but also indicate the presence of backward and forward linkages, which could result in positive externalities. However, based on the impulse response analysis, it seems that merchandise exports are more vulnerable than services exports to an unanticipated shift in FDI inflows in the medium run.     

Sectoral and Aggregate Technology Shocks:Is There a Relationship?

We analyze sector-specific shocks in productivity and demand in 19 manufacturing sectors of the Austrian economy. Based on a structural vector autoregressive model (SVAR) with long-run restrictions developed by Galí (1999) we extract technology and non-technology shocks from sectoral and aggregate data. We study their patterns and relationship by means of a principal components analysis and find a close association of sectoral and macroeconomic non-technology shocks but only a very weak association for technology shocks. Impulse response analysis indicates that for almost all manufacturing sectors as well as the aggregate Austrian economy productivity growth rates experience an immediate increase due to positive technology shocks while hours worked decline. Thereby we confirm Galís results on the level of Austrian manufacturing industries. From regression analysis, we find that our shocks are closely associated to employment growth and output growth but not to investment growth and that the reaction is different for the aggregate economy and manufacturing industries.JEL codes: D24, E23, E32, O30We thank Werner Müller and the participants of the 2004 conference of the Austrian Economic Association (NOeG) for helpful comments. We would like to thank an anonymous referee for many helpful comments that led to a substantial improvement of the paper. The usual disclaimer applies. This research project was supported by a research Grant (Project Nr. 9800) of the Jubiläumsfonds der Österreichische Nationalbank (OeNB).