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Journal of Economic Integration 2000 September;15(3) :460-484.
Foreign Direct Investment and Trade in the Asia-Pacific Region: Complementarity, Distance and Regional Economic Integration

Susan F. Stone Bang Nam Jeon 

Productivity Commission of Australia
Drexel University
Copyright ©2000 Journal of Economic Integration
This paper investigates the relationship between FDI and trade in the Asia-Pacific economies by examining the bilateral flows of trade and FDI in a cross-sectional study. The estimation results based on the gravity model show a significant and positive relationship between trade and FDI, implying a comple mentary relationship. Estimated coefficients also imply that trade has a larger impact on FDI flows than such investment has on bilateral trade flows. It is evident that the distance between the home country and the host country is a significant resistance factor for trade, but not for FDI. The estimation results
1. Deardorff, A. (1997), Determinants of Bilateral Trade: Does Gravity Work in a Classical World? in The Regionalization of the World Economy, ed., Jeffrey Frankel, Chicago, IL: University of Chicago Press.
2. Jeon, Bang Nam and Se Young Ahn (2000b), Changing Attitudes Toward Foreign Firms: An Analysis of Survey Data for Korea, Department of Economics and International Business, Drexel University.
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