FDI Penetration and Net Trade in the EU Accession Countries

Dawn Holland ()

No 226, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: This paper explores the link between foreign direct investment and trade in a panel of four countries that will accede to the European Union in 2004: Poland, Hungary, the Czech Republic and Slovenia. We augment standard demand-side export and import equations with a measure of FDI penetration. We compare results based on a panel mean-group estimator with a fixed-effects panel model that allows variation across slope parameters where necessary. We find that FDI penetration has a broadly neutral impact on the trade balance. However, the trade intensity of foreign firms differs significantly across countries.

Date: 2003-06
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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:226

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