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Outward Foreign Direct Investment and Intermediate Goods Exports: Evidence from the USA

Kemal Turkcan ()

Economie Internationale, 2007, issue 112, 51-71

Abstract: This study examines the relationship between outward FDI stocks and final and intermediate goods exports in the US economy over the period from 1989 to 2003. Using finely disaggregated trade data, the panel data estimation indicates that the outward FDI stock and intermediate goods exports are complementary activities, verifying the hypothesis that fragmentation plays an important role in explaining intra-firm trade between different plants within the same multinational companies. In contrast, the results find a weak evidence of substitution effects between final goods exports and outward FDI stocks, providing partial support for the horizontal type FDI models.

Keywords: Foreign direct investment; intermediate goods exports; final goods exports; panel econometrics (search for similar items in EconPapers)
JEL-codes: F14 F15 F23 (search for similar items in EconPapers)
Date: 2007
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Handle: RePEc:cii:cepiei:2007-4tc