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The interaction between trade and FDI: The CEECs experience

  • Claudiu Tiberiu AlbulescuEmail author
  • Daniel Goyeau
Original Paper

Abstract

Inside the EU, the commercial integration of the CEE countries has gained remarkable momentum before the crisis appearance, but it has slightly slowed down afterwards. Consequently, the interest in identifying the factors supporting the commercial integration process is high. Recent findings in the new trade theory suggest that FDI influence the trade intensity but the studies approaching this relationship for the CEE countries present mixed evidence, and investigate the commercial integration of CEE countries with the old EU members. Against this background, the purpose of this paper is to assess the CEE countries’ intra-integration, focusing on the Czech Republic, Hungary, Poland and the Slovak Republic. For each country we employ a panel gravitational model for the bilateral trade and FDI, considering its interactions with the other three countries in the sample on the one hand, and with the three EU main commercial partners on the other hand. We investigate different facets of the trade – FDI nexus, resorting to a fixed effects model, a random effects model, as well as to an instrumental variable estimator, over the period 2000–2013. Our results suggest that outward FDI sustains the CEE countries’ commercial integration, while inward FDI has no significant effect. In all the cases a complementarity effect between trade and FDI is documented, which is stronger for the CEE countries’ historical trade partners. Consequently, these findings show that CEE countries’ policymakers are interested in encouraging the outward FDI toward their neighbour countries to increase the commercial integration.

Keywords

FDI Trade Complementarity Substitution Panel models CEE countries 

JEL classification

F15 F21 C23 

Notes

Acknowledgements

This work was supported by a grant of the Romanian National Authority for Scientific Research and Innovation, CNCS –UEFISCDI, project number PN-III-P1-1.1-TE-2016-0142.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Management DepartmentPolitehnica University of TimisoaraTimisoaraRomania
  2. 2.CRIEF, University of PoitiersPoitiers CedexFrance

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