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Brenton, Paul; Mauro, Francesca Di; Lücke, Matthias

doi:10.1023/a:1007006429600

Cited by 184 publications

(13 citation statements)

References 10 publications

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“…In 2009 intra-European trade experienced a sharp decline due to the economic crisis. 5 Relative economic size is used as weight   [24].…”

Section: Resultsmentioning

confidence: 99%

“…[3,4] find a causal relationship from FDI to exports for Mexico and Latin America, respectively. [5,6] suggest a complementarity relationship between trade and FDI in the European Union and Central-Eastern European Countries (CEECs). Neary [7] finds evidence in favour of the export-platform FDI hypothesis, whereby firms locate plants in one nation as a way of covering a larger area.…”

Section: Introductionmentioning

confidence: 99%

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Foreign Direct Investment and Trade: Complements or Substitutes? Empirical Evidence for the European Union

Martínez¹,

Bengoa²,

Sánchez-Robles³

2012

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International Trade and Foreign Direct Investment (FDI) have grown at fast paces during the last decades. At this point, however, it is not clear whether trade and investment are regarded by firms as complementary ways of accessing other markets, or, instead, if they are employed as alternative strategies. This paper examines this issue empirically, for the particular case of Europe, an area in which commercial and economic integration has gained remarkable momentum since 1992. More specifically, it tests whether the reduction of trade barriers over time among the members of the European Union (EU) has increased not only trade flows but also FDI within those countries. A gravity model is estimated using the Hausman-Taylor estimation technique-to circumvent time invariability and endogeneity-for intra Europe FDI and, separately, for FDI to the EU members with origin in third countries. In addition to trade integration measures, this paper also analyzes the potential role of other traditional determinants of FDI, as the market size of the host country and the cost differential among home-host economies. The results suggest that EU commercial integration and FDI reinforce each other, thus being complements rather than substitutes in Europe. This effect is apparent for the intra-EU FDI and also for investment coming from countries outside the EU. Cost differentials are not as relevant as the possibility of gaining market share which leads us to conclude that in the EU the FDI pattern follows a horizontal strategy rather than a FDI vertical model.

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“…In 2009 intra-European trade experienced a sharp decline due to the economic crisis. 5 Relative economic size is used as weight   [24].…”

Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Foreign Direct Investment and Trade: Complements or Substitutes? Empirical Evidence for the European Union

Martínez¹,

Bengoa²,

Sánchez-Robles³

2012

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“…The traditional practice in the literature has been to take logarithms of the original multiplicative form of the gravity model and estimate the resulting log-linearized model using the OLS estimator (Brainard (1997); Brenton and Di Mauro (1999); Buch et al (2003)). Nevertheless, this approach has been proven to provide misleading estimates.…”

Section: Literature Review On Gravity Model Estimationmentioning

confidence: 99%

Understanding German FDI in Latin America and Asia: A Comparison of GLM Estimators

2020

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The growth of Foreign Direct Investment (FDI) in developing countries over the last decade has attracted an intense academic and policy-oriented interest for its determinants. Despite the gravity model being considered a useful tool to approximate bilateral FDI flows, the literature has seen a growing debate in relation to its econometric specification, so that which is the best estimator for the gravity equation is far from conclusive. This paper examines the determinants of German outward FDI in Latin America and Asia for the period 1996-2012 by evaluating the performance of alternative Generalized Linear Model (GLM) estimators. Our findings indicate that Negative Binomial Pseudo Maximum Likelihood (NBPML) is the estimator best matched to our data, followed by Gamma Pseudo Maximum Likelihood (GPML). Furthermore, German FDI in Latin America is found to be predominantly vertical in nature, whereas that in Asia is mainly market-seeking.

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“…Membership in the EU per se will not make a country's labor cheaper, its natural resources richer or technologies more advanced. What it might be related to the market size, as member states are also part of the European Economic Area, which enlarges their market (Brenton et al 1999). At the same time, this is also the case with other non-EU countries in Europe and around the world, which has free trade agreements with the EU, for example, South Korea, Norway or Israel.…”

Section: Literature Review and Theoretical Framework 21 Location Dementioning

confidence: 99%

Institutions in Transition: Is the Eu Integration Process Relevant for Inward Fdi in Transition European Economies?

Delevic¹,

Heim²

2017

EJEF

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This research challenges the contemporary view of economic policy makers in transition European economies that the EU integration process will lead to a greater inflow of Foreign Direct Investments (FDI), thereby increasing living standards. With the Brexit referendum, the integration of the EU has been threatened by a distressing existential question: is EU membership valuable for transition countries if even developed countries (like the UK) vote to leave or decided not to align like Switzerland and Norway in the past? Our analysis considers the success of several countries in Eastern Europe in attracting and benefiting from FDI on their way to EU membership. Analyzing a 13-year panel data of 16 transition countries, we found no statistically significant positive association between FDI inflow and EU accession. We argue, that it is also important to consider the welfare for domestic economies that can emerge from those investments. We illustrate this through the case study of a successful combination of institutional development and local content policies implementation accompanied by sufficient FDI inflows in a non-EU country -Kazakhstan.

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Cited by 184 publications

References 10 publications

Foreign Direct Investment and Trade: Complements or Substitutes? Empirical Evidence for the European Union

Foreign Direct Investment and Trade: Complements or Substitutes? Empirical Evidence for the European Union

Understanding German FDI in Latin America and Asia: A Comparison of GLM Estimators

Institutions in Transition: Is the Eu Integration Process Relevant for Inward Fdi in Transition European Economies?

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