International trade and factor mobility

Description

"Foreign Direct Investment (FDI) has been growing rapidly, at a pace far exceeding the growth in international trade. Thus, a full understanding of the relationship between trade in goods and FDI is important for obtaining a complete picture of the extent and sources of international linkages. We investigate whether FDI serves as a complement to trade or a substitute for trade based on the effects identified by the Rybczynski theorem whereby an increase in a factor of production used intensively in one sector affects production both in that sector and in other sectors. Using detailed data on bilateral capital and trade flows between the United States and individual Latin American countries, we examine the linkages between FDI into particular sectors of Latin American economies and the net exports of those and other manufacturing sectors. We find that FDI from the United States can lead to significant, and varied, shifts in the composition of activity in many Latin American countries and across many manufacturing industries"--Federal Reserve Bank of New York web site.

Subjects

Series Statement

• NBER working paper series -- working paper 7196
• Working paper series (National Bureau of Economic Research) -- working paper no. 7196.

Links

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Other Editions

• International trade and factor mobility: an empirical investigationNational Bureau of Economic Research1999-01-01
• International trade and factor mobilityElectronic resourceFederal Reserve Bank of New York1999-01-01