Foreign Direct Investment and Exports: Complementarity or Substitutability An Empirical Investigation

Hela Bouras and Bechir Raggad
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Hela Bouras: Department of Economics, FSEGN, University of Carthage, Tunisia,
Bechir Raggad: Department of Business Administration, College of Science and Humanities in Rumah, Majmaah University, Saudi Arabia

International Journal of Economics and Financial Issues, 2015, vol. 5, issue 4, 933-941

Abstract: The relationship between trade and direct investment, which is one of the main features of globalization, is complex and cannot be deducted from a purely theoretical analysis. The present paper seeks to lay the analytical foundation that would define the nature of the relationship be it complementary or substitutive - between exports and foreign direct investment (FDI). The purpose of our use of disaggregate sectoral database is to explore these issues econometrically while analyzing and decomposing the nature of the relationship between FDI and exports. The estimation results showed a complementary effect or a ripple effect between exports and FDI at the macro level for both manufactured and non-manufacturing sectors. Our findings have also been supported by predominant literature which finds positive relationships between FDI and exports.

Keywords: Foreign Direct Investment; Exports; Substitutability; Complementarity; Manufacturing; Non-manufacturing (search for similar items in EconPapers)
JEL-codes: F02 F14 F4 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (10)

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