Trade through FDI: investing in services

Carmen Fillat Castej�n, Joseph Francois and Julia Woerz ()
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Carmen Fillat Castej�n: Department Applied Economics and Economic History. Faculty of Economics. University of Zaragoza, Spain
Authors registered in the RePEc Author Service: Carmen Fillat-Castejon ()

Documentos de Trabajo from Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza

Abstract: The type of relationship between different modes of trading services internationally is of great interest, both for the academic literature and for liberalization policies under the GATS, because cross-border and commercial presence abroad might complement or substitute each other. This paper offers a consistent theoretical foundation for the application of the gravity model to services trade, using a composite demand model yielding testable hypothesis about that complementary or substitutive relationship and linking the results to market regulations as trade barriers. For the OECD countries over 1994-2004 a robust complementary effects in the short-run is found, reinforced in the long-run by an increased potential for cross-border imports bases on pervious FDI inflows, highlighting business, communication and financial services.

Keywords: Imports; services; panel data; substitution and complementary effects (search for similar items in EconPapers)
JEL-codes: F10 F14 F21 (search for similar items in EconPapers)
Date: 2008-06
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Citations: View citations in EconPapers (17)

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Working Paper: TRADE THROUGH FDI: investing in services (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zar:wpaper:dt2008-06

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