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2010•RePEc: Research Papers in EconomicsOpen access

FDI and trade: A Granger causality analysis in a heterogeneous panel

Raphaël Chiappini

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Abstract

This paper will investigate the Granger causality between outward Foreign Direct Investment (FDI) and the exports of goods and services in 11 European countries from 1996 to 2008. Using a new method to evaluate causality in a heterogeneous panel, we find that the causal relationship from FDI to exports is homogeneous among the panel. However, we find strong evidence of a heterogeneity of the causal relationship from exports to FDI in our sample.

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What this paper is about

This paper will investigate the Granger causality between outward Foreign Direct Investment (FDI) and the exports of goods and services in 11 European countries from 1996 to 2008. Using a new method to evaluate causality in a heterogeneous panel, we find that the causal relationship from FDI to exports is homogeneous among the panel. However, we find strong evidence of a heterogeneity of the causal relationship from exports to FDI in our sample.

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OpenAlex reports 21 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

This paper will investigate the Granger causality between outward Foreign Direct Investment (FDI) and the exports of goods and services in 11 European countries from 1996 to 2008. Using a new method to evaluate causality in a heterogeneous panel, we find that the causal relationship from FDI to exports is homogeneous among the panel. However, we find strong evidence of a heterogeneity of the causal relationship from exports to FDI in our sample.

Key concepts: Foreign direct investment, Causality (physics), Granger causality, Economics, Panel data, Econometrics, Homogeneous, Panel analysis

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