Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/57325
Authors: 
Wacker, Konstantin M.
Year of Publication: 
2011
Series/Report no.: 
Discussion papers, Ibero America Institute for Economic Research 211
Abstract: 
This paper explores the economic relationship between foreign direct investment to developing countries and the export prices of the latter, measured by terms of trade. It is first shown that economic theory suggests such a relationship for various reasons but is inconclusive about the direction of the effect. To address this open issue empirically, I analyze data on more than 50 developing countries throughout the period 1980 - 2008 using dynamic panel data methods. The results show that multinational corporations, measured by data on foreign direct investment, had an economically relevant and statistically significant positive impact on developing countries' net barter terms of trade. A higher level of education in the developing country fosters this effect.
Subjects: 
multinationals
FDI
Terms of Trade
Prebisch-Singer hypothesis
JEL: 
C23
F23
O11
Document Type: 
Working Paper

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