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A Panel Analysis of the FDI Impact on International Trade

Manuela Magalhães () and Ana Africano ()

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This paper examines the relationship between Foreign Direct Investment (FDI) and international trade. Specifically, the relationship between the stocks of inward FDI and outward FDI, and Imports and Exports in the Portuguese economy. This paper also studies some technical problems associated with panel data, which have frequently been ignored in previous studies. The problems of serial and contemporaneous correlation have not been taken into account by a panel approach and, as we know, they can have an impact on estimates and statistical inferences. The results show that there exists a complementary relationship between trade and inward stock of FDI and also a country-specific effect on the corrected panel data of heteroscedasticity and correlation.

Keywords: FDI; Trade; Gravity Analysis; Panel Data (search for similar items in EconPapers)
JEL-codes: F1 F4 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2007-01
New Economics Papers: this item is included in nep-int
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Working Paper: A Panel Analysis of the FDI Impact on International Trade (2007) Downloads
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