FDI and trade -- two way linkages?
By: Joshua Aizenman, Ilan Noy.
Contributors: Noy, Ilan.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11403; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11403.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Investments, Foreign -- Mathematical models.; International trade -- Mathematical models.
Description: "The purpose of this paper is to investigate the intertemporal linkages between FDI and disaggregated measures of international trade.  We outline a model exemplifying some of these linkages, describe several methods for investigating two-way feedbacks between various categories of trade, and apply them to the recent experience of developing countries.  After controlling for other macroeconomic and institutional effects, we find that the strongest feedback between the sub-accounts is between FDI and manufacturing trade.  More precisely, applying Geweke (1982)%u2019s decomposition method, we find that most of the linear feedback between trade and FDI (81%) can be accounted for by Granger-causality from FDI gross flows to trade openness (50%) and from trade to FDI (31%).  The rest of the total linear feedback is attributable to simultaneous correlation between the two annual series"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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