Outward FDI Effects on the Portuguese Trade Balance 1996-2007

Miguel Fonseca (), António Mendonça () and José Passos

No 2009/11, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

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.

Keywords: Foreign Direct Investment; Trade; Gravity Model; Portugal. (search for similar items in EconPapers)
JEL-codes: C23 F14 F21 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-eec and nep-int
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Working Paper: Outward FDI Effects on the Portuguese Trade Balance, 1996-2007 (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp112009

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