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Outward FDI and exports relation: A heterogeneous panel approach dealing with cross-sectional dependence

Adolfo Maza and Paula Gutiérrez-Portilla

International Economics, 2022, vol. 170, issue C, 174-189

Abstract: This paper explores the link between outward foreign direct investment (OFDI) and exports using Spain's flows to the top-50 recipient countries over the period 1995–2019. Methodologically, it addresses two often forgotten features of spatial data (heterogeneity and cross-sectional dependence) by combining a heterogeneous panel approach with the treatment of cross-sectional dependence. Indeed, when addressing cross-sectional dependence, it removes one of its two components (spatial dependence) so that comparing raw and spatially filtered data yields relevant conclusions. Findings show that OFDI has a significant positive effect on exports in the long term, but it is exclusively due to spatial dependence.

Keywords: Outward foreign direct investment; Exports; Heterogeneous panel; Cross-sectional dependence; Spatial dependence (search for similar items in EconPapers)
JEL-codes: F10 F21 F40 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:170:y:2022:i:c:p:174-189

DOI: 10.1016/j.inteco.2022.04.002

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