relation: http://eprints.imtlucca.it/3660/
title: The Indirect Effects of FDI on Trade: A Network Perspective
creator: Metulini, Rodolfo
creator: Riccaboni, Massimo
creator: Sgrignoli, Paolo
creator: Zhu, Zhen
subject: HB Economic Theory
subject: HD28 Management. Industrial Management
description: The relationship between international trade and foreign direct invest-  ment (FDI) is one of the main features of globalization. In this paper  we investigate the effects of FDI on trade from a network perspective,  since FDI takes not only direct but also indirect channels from origin to  destination countries because of firms' incentive to reduce tax burden,  to minimize coordination costs, and to break barriers to market entry.  We use a unique data set of international corporate control as a measure  of stock FDI to construct a corporate control network (CCN) where the  nodes are the countries and the edges are the corporate control relation-  ships. Based on the CCN, the network measures, i.e., the shortest path  length and the communicability, are computed to capture the indirect  channel of FDI. Empirically we find that corporate control has a positive  effect on trade both directly and indirectly. The result is robust with dif-  ferent specifications and estimation strategies. Hence, our paper provides  strong empirical evidence of the indirect effects of FDI on trade. More-  over, we identify a number of interplaying factors such as regional trade  agreements and the region of Asia. We also find that the indirect effects  are more pronounced for manufacturing sectors than for primary sectors  such as oil extraction and agriculture.
publisher: IMT School for Advanced Studies Lucca
date: 2017-03
type: Working Paper
type: NonPeerReviewed
format: application/pdf
language: en
rights: cc_by_nd
identifier: http://eprints.imtlucca.it/3660/1/EIC_WP_4_2017.pdf
identifier:   Metulini, Rodolfo and Riccaboni, Massimo and Sgrignoli, Paolo and Zhu, Zhen  The Indirect Effects of FDI on Trade: A Network Perspective.  EIC working paper series  #4/2017    IMT School for Advanced Studies Lucca    ISSN 2279-6894.