Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries

This aim of this work is to study the relationship between foreign direct investment (FDI) and trade. FDI is a driving force for economic growth for host countries. The positive effects of FDI are seen in many aspects of the economy. However, the implications of FDI on foreign trade are questionable...

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Autores principales:	Marian Catalin Voica, Mirela Panait, Eglantina Hysa, Arjona Cela, Otilia Manta
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	foreign direct investment trade complementarity substitution EU countries economic growth Risk in industry. Risk management HD61 Finance HG1-9999
Acceso en línea:	https://doaj.org/article/2785db5f0e58465fbb9e7331d6bf29df
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spelling	oai:doaj.org-article:2785db5f0e58465fbb9e7331d6bf29df2021-11-25T18:08:48ZForeign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries10.3390/jrfm141105591911-80741911-8066https://doaj.org/article/2785db5f0e58465fbb9e7331d6bf29df2021-11-01T00:00:00Zhttps://www.mdpi.com/1911-8074/14/11/559https://doaj.org/toc/1911-8066https://doaj.org/toc/1911-8074This aim of this work is to study the relationship between foreign direct investment (FDI) and trade. FDI is a driving force for economic growth for host countries. The positive effects of FDI are seen in many aspects of the economy. However, the implications of FDI on foreign trade are questionable. Therefore, this study uses a Granger causality technique to test whether the relationship between FDI and foreign trade is complementary or substitutive. The findings of this study indicate that this relationship appears to be complementary, and FDI investment does cause an increase in trade flow in the countries that are taken into consideration. This research aims to make a comparison between the relations of FDI flows of three groups of countries from the European Union (EU)—Romania and Bulgaria, the Visegrád Group and the Euro area—for the period of 2005 to 2019. However, the results indicate that this link between the variables is not yet found for the three group of countries, and further research is required in this aspect. This leads to the conclusion that the FDI impact on foreign trade of the host country depends on the type of investment and absorptive capacity of the receiver, the economic development of host and home countries, and not every type of FDI leads to more trade.Marian Catalin VoicaMirela PanaitEglantina HysaArjona CelaOtilia MantaMDPI AGarticleforeign direct investmenttradecomplementaritysubstitutionEU countrieseconomic growthRisk in industry. Risk managementHD61FinanceHG1-9999ENJournal of Risk and Financial Management, Vol 14, Iss 559, p 559 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	foreign direct investment trade complementarity substitution EU countries economic growth Risk in industry. Risk management HD61 Finance HG1-9999
spellingShingle	foreign direct investment trade complementarity substitution EU countries economic growth Risk in industry. Risk management HD61 Finance HG1-9999 Marian Catalin Voica Mirela Panait Eglantina Hysa Arjona Cela Otilia Manta Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries
description	This aim of this work is to study the relationship between foreign direct investment (FDI) and trade. FDI is a driving force for economic growth for host countries. The positive effects of FDI are seen in many aspects of the economy. However, the implications of FDI on foreign trade are questionable. Therefore, this study uses a Granger causality technique to test whether the relationship between FDI and foreign trade is complementary or substitutive. The findings of this study indicate that this relationship appears to be complementary, and FDI investment does cause an increase in trade flow in the countries that are taken into consideration. This research aims to make a comparison between the relations of FDI flows of three groups of countries from the European Union (EU)—Romania and Bulgaria, the Visegrád Group and the Euro area—for the period of 2005 to 2019. However, the results indicate that this link between the variables is not yet found for the three group of countries, and further research is required in this aspect. This leads to the conclusion that the FDI impact on foreign trade of the host country depends on the type of investment and absorptive capacity of the receiver, the economic development of host and home countries, and not every type of FDI leads to more trade.
format	article
author	Marian Catalin Voica Mirela Panait Eglantina Hysa Arjona Cela Otilia Manta
author_facet	Marian Catalin Voica Mirela Panait Eglantina Hysa Arjona Cela Otilia Manta
author_sort	Marian Catalin Voica
title	Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries
title_short	Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries
title_full	Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries
title_fullStr	Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries
title_full_unstemmed	Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries
title_sort	foreign direct investment and trade—between complementarity and substitution. evidence from european union countries
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/2785db5f0e58465fbb9e7331d6bf29df
work_keys_str_mv	AT mariancatalinvoica foreigndirectinvestmentandtradebetweencomplementarityandsubstitutionevidencefromeuropeanunioncountries AT mirelapanait foreigndirectinvestmentandtradebetweencomplementarityandsubstitutionevidencefromeuropeanunioncountries AT eglantinahysa foreigndirectinvestmentandtradebetweencomplementarityandsubstitutionevidencefromeuropeanunioncountries AT arjonacela foreigndirectinvestmentandtradebetweencomplementarityandsubstitutionevidencefromeuropeanunioncountries AT otiliamanta foreigndirectinvestmentandtradebetweencomplementarityandsubstitutionevidencefromeuropeanunioncountries
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Foreign Direct Investment and Trade—Between Complementarity and Substitution. Evidence from European Union Countries

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