Trade and Investment in the Global Economy

James Anderson, Mario Larch and Yoto Yotov

No 6625, CESifo Working Paper Series from CESifo

Abstract: We develop a dynamic multi-country trade model with foreign direct investment (FDI) in the form of non-rival technology capital. The model nests structural gravity subsystems for FDI and trade, with accumulation/decumulation of phyisical and technology capital in transition to the steady state. The empirical importance of the FDI channel is demonstrated comparing actual aggregate cross-section data for 89 countries in 2011 to a hypothetical world without FDI. The gains from FDI amount to 9% of world’s welfare and to 11% of world’s trade, unevenly distributed among winners and losers. Net exports of FDI substitute for export trade in the results.

Keywords: foreign direct investment; trade; trade liberalization; capital accumulation (search for similar items in EconPapers)
JEL-codes: F10 F43 O40 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Trade and Investment in the Global Economy (2017)
Working Paper: Trade and Investment in the Global Economy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6625

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