Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171089
Authors: 
Anderson, James E.
Larch, Mario
Yotov, Yoto V.
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6625
Abstract: 
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.
Subjects: 
foreign direct investment
trade
trade liberalization
capital accumulation
JEL: 
F10
F43
O40
Document Type: 
Working Paper
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