Foreign Direct Investment and Trade in the Asia-Pacific Region: Complementarity, Distance and Regional Economic Integration

Stone, Susan F.; Jeon, Bang Nam

doi:2000.15.3.460

The Journal of Economic Integration 2000 September;15(3) :460-484.
DOI: https://doi.org/10.11130/jei.2000.15.3.460

Foreign Direct Investment and Trade in the Asia-Pacific Region: Complementarity, Distance and Regional Economic Integration

Susan F. Stone, Bang Nam Jeon,

Productivity Commission of Australia
Drexel University

ABSTRACT

This paper investigates the relationship between FDI and trade in the Asia-Pacific economies by examining the bilateral flows of trade and FDI in a cross-sectional study. The estimation results based on the gravity model show a significant and positive relationship between trade and FDI, implying a comple mentary relationship. Estimated coefficients also imply that trade has a larger impact on FDI flows than such investment has on bilateral trade flows. It is evident that the distance between the home country and the host country is a significant resistance factor for trade, but not for FDI. The estimation results

REFERENCE

1.	Deardorff, A. (1997), Determinants of Bilateral Trade: Does Gravity Work in a Classical World? in The Regionalization of the World Economy, ed., Jeffrey Frankel, Chicago, IL: University of Chicago Press.

2.	Jeon, Bang Nam and Se Young Ahn (2000b), Changing Attitudes Toward Foreign Firms: An Analysis of Survey Data for Korea, Department of Economics and International Business, Drexel University.