Foreign Direct Investment and Exports: Complementarity or Substitutability An Empirical Investigation

Authors

  • Hela Bouras
  • Bechir Raggad Department of Business Administration, College of Science and Humanities at Rumaah, Majmaah University, Saudi Arabia. FSEGN, University of Carthage, Tunisia BESTMOD laboratry, Institut supérieur de Gestion de Tunis, Tunisia

Abstract

The relationship between trade and direct investment, which is one of the main features of globalization, is complex and cannot be deducted from a purely theoretical analysis. The present paper seeks to lay the analytical foundation that would define the nature of the relationship – be it complementary or substitutive - between Exports and Foreign Direct Investment (FDI).  The purpose of our use of disaggregate sectoral database is to explore these issues econometrically while analyzing and decomposing the nature of the relationship between FDI and exports. The estimation results showed a complementary effect or a ripple effect between Exports and FDI at the macro level for both manufactured and non-manufacturing sectors. Our findings have also been supported by predominant literature which finds positive relationships between FDI and exports.

Keywords: FDI; Exports; Substitutability; Complementarity; manufacturing; non-manufacturing.

JEL Classifications: F02; F4; F14

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Published

2015-10-16

How to Cite

Bouras, H., & Raggad, B. (2015). Foreign Direct Investment and Exports: Complementarity or Substitutability An Empirical Investigation. International Journal of Economics and Financial Issues, 5(4), 933–941. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/1372

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