Bilateral FDI and Canadian Export Activity
This study examines how Canadian exports to a specific trading partner are influenced by outward and inward direct investment flows to/from that country. A gravity-type empirical model guides a dynamic panel analysis which utilizes Organization For Economic Cooperation and Development (OECD) country-level data from 1989–2007. Besides refuting the contention that outward foreign direct investment (FDI) displaces exports, the findings also imply a strong role for intra-firm based export growth in response to inward FDI. The analysis is enriched by explicitly accounting for the dominant position of the United States within the context of Canada's overall trade and investment flows.
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Document Type: Research Article
Affiliations: 1: School of Business, Clarkson University, Potsdam, New York, USA 2: Department of Economics, Northern Illinois University, DeKalb, Illinois, USA
Publication date: July 1, 2011