Investment Liberalisation and International Trade

University of Nottingham Research Paper No. 2001/12

31 Pages Posted: 23 Jul 2001

See all articles by Mary Amiti

Mary Amiti

International Monetary Fund (IMF) - Trade Unit; University of Melbourne - Department of Economics; Centre for Economic Policy Research (CEPR)

Katharine Wakelin

University of Nottingham - School of Economics

Abstract

This paper estimates the cross-price elasticity of exports with respect to investment costs for bilateral relations between the US and 35 partner countries. We show that the relationship depends on country characteristics as predicted by the Markusen et al. (1996) model. When countries differ in relative factor endowments and trade costs are low, investment liberalisation stimulates exports, whereas when countries are similar in terms of relative factor endowments and size, and trade costs are moderate to high, investment liberalisation reduces exports.

JEL Classification: F12 F14, F23

Suggested Citation

Amiti, Mary and Wakelin, Katharine, Investment Liberalisation and International Trade. University of Nottingham Research Paper No. 2001/12. Available at SSRN: https://ssrn.com/abstract=277595 or http://dx.doi.org/10.2139/ssrn.277595

Mary Amiti (Contact Author)

International Monetary Fund (IMF) - Trade Unit ( email )

700 19th Street NW
Washington, DC 20431
United States
202-986-3572 (Phone)
202-589-7767 (Fax)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia
+61 3 8344 7652 (Phone)
+61 3 8344 6899 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Katharine Wakelin

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 4734 (Phone)
+44 115 951 4159 (Fax)

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