EconPapers    
Economics at your fingertips  
 

Do Overseas investments create or replace trade? New insights from a macro-sectoral study on Japan

Raphaël Chiappini ()

Working Papers from HAL

Abstract: This paper investigates the relationship between outward foreign direct investment (FDI) and both exports and imports from Japan. Using the Poisson pseudomaximum likelihood (PPML) estimator developed by Santos Silva and Tenreyro (2006) to deal with the problem of zero trade flows when estimating a gravity equation, we show that the complementary relationship between FDI and exports is overestimated when using the Ordinary Least Square (OLS) estimator. The PPML method also allows sectoral estimation of the relationship. We find that whether outward FDI creates or replaces trade depends on the industry under scrutiny. Our results indicate that the complementary relationship between FDI and trade is dominant in the Japanese manufacturing sector, especially in electric machinery, transportation equipement and precision machinery. We find also that Japanese overseas investments substitute for exports in chemicals products and for both exports and imports in general machinery.

Keywords: Exports; imports; outward foreign direct investment (FDI); Poisson pseudo-maximum likelihood (PPML) (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-int
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00854109
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://hal.archives-ouvertes.fr/hal-00854109/document (application/pdf)

Related works:
Journal Article: Do overseas investments create or replace trade? New insights from a macro-sectoral study on Japan (2016) Downloads
Working Paper: Do overseas investments create or replace trade? New insights from a macro-sectoral study on Japan (2016)
Working Paper: Do Overseas Investments Create or Replace Trade? New insights from a Macro-Sectoral Study on Japan (2014) Downloads
Working Paper: Do Overseas investments create or replace trade? New insights from a macro-sectoral study on Japan (2013)
Working Paper: Do Overseas investments create or replace trade? New insights from a macro-sectoral study on Japan (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-00854109

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2021-03-28
Handle: RePEc:hal:wpaper:hal-00854109