The Relationship between Intra-Industry Foreign Direct Investment and Intra-Industry Trade in China

Licai Lyu () and David Blandford ()

Panoeconomicus, 2019, vol. 66, issue 2, 241-255

Abstract: This paper explores the relationship between intra-industry investment (III) and intra-industry trade (IIT) using cointegration and the Granger causality test. The empirical results indicate that there is a long-run equilibrium cointegration relationship between III and IIT in Chinese agriculture, manufacturing, the service sector and industry as a whole, and that this relationship is negative. Unidirectional Granger causality runs from III to IIT in manufacturing, the service sector and industry as a whole, but there is no strong evidence of causality running from IIT to III in any industry in China. Key words: Intra-industry foreign direct investment, Intra-industry trade, Cointegration, Granger causality.JEL: F14, F21, F23. Odnos između intra-industrijskih stranih direktnih investicija i intra-industrijske trgovine u Kini U radu se istražuje odnos između intra-industrijske investicije (III) i intra-industrijske trgovine (IIT) koristeći kointegraciju i Grangerov test uzročnosti. Empirijski rezultati pokazuju da postoji dugoročna kointegraciona ravnoteža između III i IIT u kineskoj poljoprivredi, proizvodnji, sektoru usluga i industriji u celini, i da je ovaj odnos negativan. Jednosmerna Grangerova uzročnost kreće se od III do IIT u proizvodnji, uslužnom sektoru i industriji kao celini, ali nema jakih dokaza o uzročnosti od IIT do III u bilo kojoj industriji u Kini. Ključne reči: Intra-industrijska direktna strana ulaganja, intra-industrijska trgovina, kointegracija, Grangerova uzročnost.

Keywords: Intra-industry foreign direct investment; Intra-industry trade; Cointegration; Granger causality (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:voj:journl:v:66:y:2019:i:2:p:241-255:id:431

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