Home Country Trade Effects of Outward FDI: an analysis of the Portuguese case, 1996-2007

Miguel Fonseca (), António Mendonça () and José Passos ()
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José Passos: Technical University of Lisbon – School of Economics and Business Administration

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

Abstract: Given the increased internationalisation of the Portuguese economy through outward Foreign Direct Investment (FDI), particularly on the Portuguese-speaking countries, our main objective is to discuss the empirical relationship between this outward FDI and trade. We use panel data analysis within a framework of gravity equations for exports and imports, with a sample composed by EU-15, U.S.A., Brazil, Angola, Japan and China, for the period 1996-2007. Our main conclusion is that the empirical evidence for Portugal is consistent with a substitution hypothesis between direct investment abroad and trade, and consequently we detect a negative trade balance effect with the majority of countries in our sample, excepting Angola and, in a lesser extension, Spain.

Keywords: Foreign Direct Investment; Trade; Gravity Model; Portugal (search for similar items in EconPapers)
JEL-codes: C23 F14 F21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-03
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:365

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