A Touch of Sophistication: FDI and Unit Values of Exports

39 Pages Posted: 8 Dec 2009

See all articles by Torfinn Harding

Torfinn Harding

University of Oxford

Beata Smarzynska Javorcik

University of Oxford - Department of Economics; European Bank for Reconstruction and Development (EBRD)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2009

Abstract

The debate on trade and growth increasingly focuses on the composition of exports. Exports of more “sophisticated” products appear to be positively correlated with growth, and upgrading the quality of exports is high on the policy agenda of many countries. This study presents evidence suggesting that attracting inflows of FDI offers potential for upgrading a country’s export basket. The empirical analysis relates unit values of exports measured at the 4-digit SITC level to data on sectors treated by investment promotion agencies as priority in their efforts to attract FDI. The sample covers 116 countries over the period 1984-2000. The findings are consistent with a positive effect of FDI on unit values of exports in developing countries. However, such a relationship is less evident in developed countries. These results suggest that FDI can help bridge gaps in production and marketing techniques between developing and high income economies.

Keywords: export quality, unit values, FDI, investment promotion, industrial policy

JEL Classification: F10, L52, F21, F23

Suggested Citation

Harding, Torfinn and Smarzynska Javorcik, Beata, A Touch of Sophistication: FDI and Unit Values of Exports (December 2009). CESifo Working Paper Series No. 2865, Available at SSRN: https://ssrn.com/abstract=1519799 or http://dx.doi.org/10.2139/ssrn.1519799

Torfinn Harding (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

HOME PAGE: http://www.economics.ox.ac.uk/index.php/staff/page/harding

Beata Smarzynska Javorcik

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

European Bank for Reconstruction and Development (EBRD) ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
183
Abstract Views
1,563
Rank
293,385
PlumX Metrics