Trade and Investment in the Global Economy

James E. Anderson (anderson@bc.edu), Mario Larch and Yoto Yotov
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James E. Anderson: Boston College, Postal: Department of Economics , Boston College , Chestnut Hill, MA 02467
Authors registered in the RePEc Author Service: James Anderson and James L. Anderson

No 2017-9, School of Economics Working Paper Series from LeBow College of Business, Drexel University

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 sub-systems for FDI and trade, with accumulation/decumulation of physical 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)
Pages: 67 pages
Date: 2017-08-21
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (20)

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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:ris:drxlwp:2017_009

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