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Intermediary Products: FDI Strategies, Imports, Exports, and Trade Balances in Developed Economies
Author(s) -
Napshin Stuart,
Brouthers Lance Eliot
Publication year - 2015
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.21673
Subject(s) - foreign direct investment , multinational corporation , international economics , international trade , investment (military) , business , economics , international business , finance , politics , political science , law , macroeconomics , management
Has the relationship between the dominant investment motives of multinational enterprises ( MNEs ) and national trade balances, imports, and exports changed over time? A 1996 study hypothesized and found that the MNE market versus resource seeking investment motives in developed countries ( DCs ) resulted in different aggregate impacts on national trade balances, imports, and exports. In this study, we ask whether the increased use of intermediary products, a major change in the way MNEs conduct business, affect the previously found patterns. Because firm‐level data on intermediary products is not widely available across countries, we indirectly test their impact, hypothesizing that the rise in use of intermediary products has changed MNE investment motives in DCs , resulting in stronger relationships between foreign direct investment ( FDI ) and imports/exports in high‐ FDI DCs but weaker links between FDI and national trade balances. Implications and future research directions are discussed. © 2015 Wiley Periodicals, Inc.