Startseite Foreign Direct Investment and International Trade in WAEMU- Panel Causality and Long-term Relationship Analysis
Artikel
Lizenziert
Nicht lizenziert Erfordert eine Authentifizierung

Foreign Direct Investment and International Trade in WAEMU- Panel Causality and Long-term Relationship Analysis

  • Ousseini Amadou Maiga ORCID logo EMAIL logo , Issoufou Oumarou und Salifou Kigbajah Coulibaly
Veröffentlicht/Copyright: 17. September 2019

Abstract

Using panel data from 1990 to 2016, this paper examines the Granger causality and long-run relationship between foreign direct investment, and trade (imports, exports, and trade openness) in the West African economic and monetary union (WAEMU). This study will determine the link between international trade and foreign direct investment to the policymakers. The study follows the short-run causality, cointegration, and long-run approach. The Granger causality tests that there is causality between trade and FDI. The analysis uses Kao and Pedroni method which reveal the existence of cointegration between trade and FDI. The long-run effect tests suggested that foreign direct investment has a positive long-run effect increasing export WAEMU. The tests also indicate that foreign direct investment has a positive long-run effect spurring import and leads to more trade openness in WAEMU. Additionally, the long run estimation indicates that FDI induces to more trade openness in WAEMU. Moreover, the analysis indicates also that export and import have a positive and significant long-run effect on foreign direct investment. Furthermore, the estimation indicates that trade openness has a positive and significant impact on attracting more foreign investment in WAEMU. We explored the economic and policy implications of our analyses in the conclusions.

References

Agosin, M. and R. Mayer (2000): Foreign Investment in Developing Countries, Does it Crowd in Domestic Investment. (UNCTAD Discussion Paper No. 146). http://unctad.org/en/docs/dp_146.en.pdf.10.1080/13600810500137749Suche in Google Scholar

Ahmad, H. M., S. Alam and S. M. Butt (2003): Foreign Direct Investment, Exports, & Domestic Output in Pakistan, The Pakistan Development Review 42(4), 715–723.10.30541/v42i4IIpp.715-723Suche in Google Scholar

Aizenman, J. and I. Noy (2006): FDI and Trade-Two-Way Linkages? The Quarterly Review of Economics and Finance 46(3), 317–337.10.1016/j.qref.2006.02.004Suche in Google Scholar

Amiti, M., D. Greenaway and K. Wakelin (2000): Foreign Direct Investment and Trade: Substitutes or Complements? http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.606.7226&rep=rep1&type=pdf. (accessed November 02, 2018).Suche in Google Scholar

Anwar, S. and L. P. Nguyen (2010): Foreign Direct Investment and Economic Growth in Vietnam, Asia Pacific Business Review 16(1–2), 183–202.10.4324/9781315875620-10Suche in Google Scholar

Ayanwale, A. B. (2007): FDI &economic Growth: Evidence from Nigeria. African Economic Research Consortium Paper 165. Nairobi.Suche in Google Scholar

Bertschek, I. (1995): Product and Process Innovation as a Response to Increasing Imports and Foreign Direct Investment, The Journal of Industrial Economics 43(4), 341–357.10.2307/2950548Suche in Google Scholar

Beugelsdijk, S., R. Smeets and R. Zwinkels (2008): The Impact of Horizontal and Vertical FDI on Host’s Country Economic Growth, International Business Review 17(4), 452–472.10.1016/j.ibusrev.2008.02.004Suche in Google Scholar

Blind, K. and A. Jungmittag (2004): Foreign Direct Investment, Imports and Innovations in the Service Industry, Review of Industrial Organization 25(2), 205–227.10.1007/s11151-004-3537-xSuche in Google Scholar

Blonigen, B. A., R. B. Davies, G. R. Waddell and H. T. Naughton (2004): FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment. National Bureau of Economic Research. NBER Working Paper No. 1093910.3386/w10939Suche in Google Scholar

Clausing, K. (2000): Does Multinational Activity Displaces Trade? Economic Inquiry 38(2), 190–205.10.1111/j.1465-7295.2000.tb00013.xSuche in Google Scholar

Dasgupta, N. (2008): Examining the Long Run Effects of Export, Import and FDI Inflows on the FDI Outflows from India: A Causality Analysis. https://pdfs.semanticscholar.org/00f3/8329fbb67ffc658a85cb291cd9699a63a266.pdf?_ga=2.192708137.201780676.1567208778-2095918969.1567208778.10.51240/jibe.2009.1.4Suche in Google Scholar

Doyle, E. (1998): Export-Output Causality: The Irish Case 1953–93, Atlantic Economic Journal 26(2), 147–161.10.1007/BF02299357Suche in Google Scholar

Driffield, N. and J. H. Love (2007): Linking FDI Motivation and Host Economy Productivity Effects: Conceptual and Empirical Analysis, Journal of International Business Studies 38(3), 460–473.10.1057/palgrave.jibs.8400268Suche in Google Scholar

Dritsaki, M., C. Dritsaki and A. Adamopoulos (2004): A Causal Relationship between Trade, Foreign Direct Investment and Economic Growth in Greece, American Journal of Applied Sciences 1(3), 230.10.3844/ajassp.2004.230.235Suche in Google Scholar

Dunning, J. H. (1988): Explaining International Production. London: Unwin Hyman.Suche in Google Scholar

Dunning, J. H., C. Kim and J. D. Lin (2001): Incorporating Trade into the Investment Development Path: A Case Study of Korea and Taiwan, Oxford Development Studies 29(2), 145–154.10.1080/13600810123926Suche in Google Scholar

Fukasaku, K., L. R. De Mello and R. Luiz (2000): Trade and Foreign Direct Investment in Latin America and Southeast Asia: Temporal Causality Analysis, Journal of International Development 12(7), 903–924.10.1002/1099-1328(200010)12:7<903::AID-JID695>3.0.CO;2-8Suche in Google Scholar

Grubert, H. and J. Mutti (2000): Do Taxes Influence where US Corporations Invest? National Tax Journal 53, 825–839.10.17310/ntj.2000.4.02Suche in Google Scholar

Haddad, M. and A. Harrison (1993): Are There Positive Spillovers from Direct Foreign Investment? Journal of Development Economics 42, 51–74.10.1016/0304-3878(93)90072-USuche in Google Scholar

Hailu, Z. A. (2010): Demand Side Factors Affecting the Inflow of Foreign Direct Investment to African Countries: Does Capital Market Matter?, International Journal of Business and Management, 5(5), 104–116.10.5539/ijbm.v5n5p104Suche in Google Scholar

Head, K. and J. Ries (2001): Overseas Investment and Firm Exports, Review of International Economics 9(1), 108122.10.1111/1467-9396.00267Suche in Google Scholar

Helpman, E. (1984): A Simple Theory of International Trade with Multinational Corporations, Journal of Political Economy 92(3), 451–471.10.1086/261236Suche in Google Scholar

Helpman, E., M. Melitz and S. Yeaple (2004): Exports versus FDI with Heterogeneous Firms, American Economic Review 94(1), 300–316.10.1257/000282804322970814Suche in Google Scholar

Horstmann, I. J. and J. R. Markusen (1992): Endogenous Market Structures in International Trade (natura Facit Saltum), Journal of International Economics 32(1–2), 109–129.10.1142/9789811222962_0002Suche in Google Scholar

Hsiao, F. S. T. and M. C. W. Hsiao (2006): FDI, Exports, and GDP in East and Southeast Asia— Panel Data versus Time-series Causality Analyses, Journal of Asian Economics 17(6), 1082–1106.10.1142/9789811205415_0004Suche in Google Scholar

IMF (2019): West African Economic and Monetary Union, https://www.imf.org/~/media/Files/Publications/CR/2019/1WAUEA2019002.ashx.10.5089/9781498318990.002Suche in Google Scholar

Jayachandran, G. and A. Seilan (2010): A Causal Relationship between Trade, Foreign Direct Investment and Economic Growth for India, International Research Journal of Finance and Economics 42, 74–88.Suche in Google Scholar

Jayakumar, A., L. Kannan and G. Anbalagan (2014): Impact of Foreign Direct Investment, Imports and Exports, International Review of Research in Emerging Markets and the Global Economy (IRREM) 1(1), 51–58.Suche in Google Scholar

Kao, C. (1999): Spurious Regression and Residual-based Tests for Cointegration in Panel Data, Journal of Econometrics 90(1), 1–44.10.1016/S0304-4076(98)00023-2Suche in Google Scholar

Khan, M. A. (2008): Financial Development and Economic Growth in Pakistan: Evidence Based on Autoregressive Distributed Lag (ARDL) Approach, South Asia Economic Journal 9(2), 375–391.10.1177/139156140800900206Suche in Google Scholar

Kim, Y. and S.-C. Lee (2014): An Analysis of the Interaction of Trade and Foreign Direct Investment between South Korea and India, Seoul Journal of Economics 27(1), 68–85.Suche in Google Scholar

Kobrin, S. (2005): The Determinants of Liberalization of FDI Policy in Developing Countries: 1991-2001, Transnational Corporation 14(1), 67–103.Suche in Google Scholar

Lane, P. R. and G. M. Milesi-Ferretti (2008): International Investment Patterns, The Review of Economics and Statistics 90(3), 538–549.10.1162/rest.90.3.538Suche in Google Scholar

Le, M. H. and A. Ataullah (2006): Foreign Capital and Economic Performance of Pakistan, The Lahore Journal of Economics 7(1), 1–32.10.35536/lje.2002.v7.i1.a1Suche in Google Scholar

Levchenko, A. A. (2004): Institutional Quality and International Trade, International Monetary Fund. Working Paper No. 04/231, 1–47.10.5089/9781451875560.001Suche in Google Scholar

Liu, L.-G. and E. M. Graham (1998): The Relationship between Trade and Foreign Investment: Empirical Results for Taiwan and South Korea, Institute for International Economics, Peterson Institute for International Economics, Working Paper 98-7Suche in Google Scholar

Liu, X., C. Wang and Y. Wei (2001): Causal Links between Foreign Direct Investment and Trade in China, China Economic Review 12(2), 190–202.10.1016/S1043-951X(01)00050-5Suche in Google Scholar

Marchant, M., D. Cornell and W. Koo (2002): International Trade and Foreign Direct Investment: Substitutes or Complements? Journal of Agricultural and Applied Economics 34(2), 289–302.10.1017/S1074070800009044Suche in Google Scholar

Markusen, J. R. and A. J. Venables (1996): The Theory of Endowment, Intra-Industry, and Multinational Trade, National Bureau of Economic Research, NBER Working Paper No. 5529.10.3386/w5529Suche in Google Scholar

Markusen, J. R. and A. J. Venables (1998): Multinational Firms and the New Trade Theory, Journal of International Economics 46(1998), 183–203.10.3386/w5036Suche in Google Scholar

Mekki, R. (2005): The Impact of Foreign Direct Investment on Trade: Evidence from Tunisia, in: S. MotamenSamadian (ed.) Capital Flows and Foreign Direct Investments in Emerging Markets. London: Palgrave Macmillan.10.1057/9780230597969_7Suche in Google Scholar

Meyer, K. E. (2003): FDI Spillovers in Emerging Markets: A Literature Review and New Perspectives. DRC Working Papers, Foreign Direct Investment in Emerging Markets, Centre for New and Emerging Markets, London Business School, No. 15, London, UK, 55 pp.Suche in Google Scholar

Michael R. M., Abrigo and Inessa Love (2016): Estimation of Panel Vector Autoregression in Stata: A Package of Programs, Working Papers 201602, University of Hawaii at Manoa, Department of Economics.Suche in Google Scholar

Mottaleb, K. A. (2007): Determinants of Foreign Direct Investment and Its Impact on Economic Growth in Developing Countries. Paper No. 9457, Germany: Munich Personal Repec Archive.Suche in Google Scholar

Mucchielli, J. L. and I. Soubaya (2000): Trade and Foreign Direct Investment: An Analysis of Intra-firm and Arm’s Length Trade of French Multinational Firms, Paper present at the Pacific Rim Conference, Sydney, 11-16, Jan.10.4324/9780203166703.ch4Suche in Google Scholar

Pacheco-López, P. (2005): Foreign Direct Investment, Exports and Imports in Mexico, The World Economy 28(8), 1157–1172.10.1111/j.1467-9701.2005.00724.xSuche in Google Scholar

Pedroni, P. (1999): Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors, Oxfort Bulletin of Economics and Statistics 61(s1), 653–670.10.1111/1468-0084.61.s1.14Suche in Google Scholar

Pedroni, P. (2004): Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests With an Application to the PPP Hypothesis, Econometric Theory 20(2004), 597–625.10.1017/S0266466604203073Suche in Google Scholar

Pontes, J. P. (2005): FDI and Trade: Complements and Substitutes, https://pdfs.semanticscholar.org/d2ad/fb1181ca8e273e00487f00a93e532f1c7391.pdf.Suche in Google Scholar

Pramadhani, M., R. K. Bissoondeeal and N. L. Driffield (2007): FDI, Trade and Growth, A Causal Link? Aston Business School. United Kingdom, ICITI 2011.Suche in Google Scholar

Pugel, T. A. and P. H. Lindert (2000): International Economics: International Edition. Columbus, USA: McGraw-Hill.Suche in Google Scholar

Rose, A. and M. Spiegel (2004): A Gravity Model of Sovereign Lending: Trade, Default, and Credit, IMF Economic Review 51(1), 50–63.10.2307/30035885Suche in Google Scholar

Ruggiero, R. (1996): Foreign Direct Investment and the Multinational Trade System, Transnational Corporation 5, 1–18.Suche in Google Scholar

Sahoo, P. (2006): Foreign Direct Investment in South Asia: Policy, Trends, Impact and Determinants. Discussion Paper, No. 56, Tokyo, Japan: ADB institute.Suche in Google Scholar

Shahbaz, M. and N. Aamir (2008): Foreign Direct Investment and Income Distribution: A Case Study for Pakistan, International Research Journal of Finance and Economics 7, 7–18.Suche in Google Scholar

Siddiqi, M. W., A. Ali and M. I. Chani (2014): Import Demand, Economic Development and Trade Liberalization in Pakistan: An Empirical Analysis, Bulletin of Business and Economics 3(2), 131–141.Suche in Google Scholar

Swenson, D. L. (2004): Foreign Investment and the Mediation of Trade Flows, Review of International Economics 12(4), 609–629.10.1111/j.1467-9396.2004.00470.xSuche in Google Scholar

Sylwester, K. (2005): Foreign Direct Investment, Growth, and Income Inequality in Less Developing Countries, International Review of Applied Economics 19(3), 289–300.10.1080/02692170500119748Suche in Google Scholar

Tabassum, U., M. Nazeer and A. A. Siddiqui (2012): Impact of FDI on Import Demand and Export Supply Functions of Pakistan: An Econometric Approach, Journal of Basic & Applied Sciences 8(1), 151–159.10.6000/1927-5129.2012.08.01.16Suche in Google Scholar

Tekin, R. B. (2012): Economic Growth, Exports and Foreign Direct Investment in Least Developed Countries: A Panel Granger Causality Analysis, Economic Modelling 29(3), 868–878.10.1016/j.econmod.2011.10.013Suche in Google Scholar

Toda, H. Y. and T. Yamamoto (1995): Statistical Inference in Vector Autoregressions with Possibly Integrated Processes, Journal of Econometrics 66(1–2), 225–250.10.1016/0304-4076(94)01616-8Suche in Google Scholar

Vernon, R. (1966): International Investment and International Trade in the Product Life Cycle, Quarterly Journal of Economics 80(2), 190–207.10.2307/1880689Suche in Google Scholar

Zhang, K. H. and S. Song (2000): Promoting Exports: The Role of Inward FDI in China, China Economic Review 11(4), 385–396.10.1016/S1043-951X(01)00033-5Suche in Google Scholar

Zhang, Q. and B. Felmingham (2001): The Relationship between Inward Direct Foreign Investment and China’s Provincial Export Trade, China Economic Review 12(1), 82–99.10.1016/S1043-951X(01)00044-XSuche in Google Scholar

Published Online: 2019-09-17
Published in Print: 2019-09-25

© 2019 Oldenbourg Wissenschaftsverlag GmbH, Published by De Gruyter Oldenbourg, Berlin/Boston

Heruntergeladen am 4.11.2025 von https://www.degruyterbrill.com/document/doi/10.1515/roe-2019-0011/html
Button zum nach oben scrollen