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Trade and investment in the global economy : A multi-country dynamic analysis

Title data

Anderson, James E. ; Larch, Mario ; Yotov, Yoto V.:
Trade and investment in the global economy : A multi-country dynamic analysis.
In: European Economic Review. Vol. 120 (2019) . - No. 103311.
ISSN 0014-2921
DOI: https://doi.org/10.1016/j.euroecorev.2019.103311

Abstract in another language

We develop a multi-country trade model with domestic investment in physical capital and foreign direct investment (FDI) in the form of non-rival technology capital. Gravity sub-systems for FDI and trade nest with accumulation/decumulation of physical and technology capital in transition to the steady state. The key innovation of our work is the modeling and quantification of the general equilibrium links between trade and investment in the global economy. The importance of FDI is quantified in our calibrated model by comparing aggregate data for 89 countries in 2011 to a counterfactual world without outward and inward FDI from and to low- and lower-middle-income countries. World welfare loss from FDI removal in the poorer countries in the world is around 6%, while world trade falls around 7%, unevenly distributed among winners and losers. Net exports of FDI substitute for export trade across countries.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: Foreign direct investment; Trade; Trade liberalization; Capital accumulation
Subject classification: JEL: F10, F43, O40
Institutions of the University: Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VI: Empirical Economic Research
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VI: Empirical Economic Research > Chair Economics VI: Empirical Economic Research - Univ.-Prof. Dr. Mario Larch
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 02 Jun 2022 06:46
Last Modified: 02 Jun 2022 06:46
URI: https://eref.uni-bayreuth.de/id/eprint/69901