EconPapers    
Economics at your fingertips  
 

A theory of the relationship between foreign direct investment and trade

José Pontes

ERSA conference papers from European Regional Science Association

Abstract: Although empirical evidence shows that the relationship between foreign direct investment (FDI) and trade is complex, theories of international investment (both vertical and horizontal) present simple patterns of relation. By allowing for different locations of vertically-related stages of production and distinguishing between trade in finished goods and trade in intermediate goods, this paper introduces a non monotonic relationship between multinational firms and trade costs, which must be neither too high nor too low for FDI to arise. Exports and FDI be have as complements for high levels of trade costs and as substitutes otherwise. J.E.L. Classification: F23, F12, C72. Keywords: Foreign Direct Investment, Multinationals, Trade, Intermediate Goods, Non cooperative Games.

Date: 2004-08
New Economics Papers: this item is included in nep-geo, nep-int and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www-sre.wu.ac.at/ersa/ersaconfs/ersa04/PDF/47.pdf (application/pdf)

Related works:
Journal Article: A theory of the relationship between foreign direct investment and trade (2004) Downloads
Working Paper: A Theory of the Relationship Between Foreign Direct Investment and Trade (2003)
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:wiw:wiwrsa:ersa04p47

Access Statistics for this paper

More papers in ERSA conference papers from European Regional Science Association Welthandelsplatz 1, 1020 Vienna, Austria.
Bibliographic data for series maintained by Gunther Maier ().

 
Page updated 2024-05-20
Handle: RePEc:wiw:wiwrsa:ersa04p47