Trade and Investment in the Global Economy

Arbeitspapier

We develop a dynamic multi-country trade model with foreign direct investment (FDI) in the form of non-rival technology capital. The model nests structural gravity subsystems for FDI and trade, with accumulation/decumulation of phyisical and technology capital in transition to the steady state. The empirical importance of the FDI channel is demonstrated comparing actual aggregate cross-section data for 89 countries in 2011 to a hypothetical world without FDI. The gains from FDI amount to 9% of world’s welfare and to 11% of world’s trade, unevenly distributed among winners and losers. Net exports of FDI substitute for export trade in the results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 6625

Classification and Topics

• Classification: Wirtschaft ; Trade: General ; Economic Growth of Open Economies ; Economic Growth and Aggregate Productivity: General
• Subject: foreign direct investment ; trade ; trade liberalization ; capital accumulation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Anderson, James E. ; Larch, Mario ; Yotov, Yoto V.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/171089
• Last update: 10.03.2025, 11:43 AM CET