Foreign Direct Investment (FDI) and Trade Patterns of Eastern European Economies

Pantelis Pantelidis and Dimitrios Kyrkilis ()
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Dimitrios Kyrkilis: Department of Balkan, Slavic and Oriental Studies, University of Macedonia, Postal: 156 Egnatia Street,, GR-540 06 Thessaloniki,, Greece,, http://www.uom.gr/

Economia Internazionale / International Economics, 1995, vol. 48, issue 3, 387-395

Abstract: The aim of this paper is to develop a model for predicting the potential effects of FDI on exports and imports of Eastern European countries. The fundamental hypothesis is that in a dynamic environment FDI changes its pattern as new conditions develop. The model takes the form of a system of three equations consisting of an export, import and level of development functions. By solving this system, the necessary conditions for export promoting FDI, import substituting FDI, import complementary FDI and export reducing FDI are stated. These conditions specify the relationship between the transformation process, which may be considered as the country specific characteristics, government policies included, and trade flows; and also the relationship between FDI which may be viewed as approximating the global strategies of MNEs and trade flows.

Date: 1995
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