Theoretical and Applied Economics (Dec 2019)
Does FDI substitute exports of home country? A case of US FDI in select Asian economies
Abstract
This paper analyzes the substitution effect of outward FDI on the exports of the home country. The US is selected as the home country for its position amongst the top FDI providing countries and select Asian economies as host countries viz. China, Japan, India, Republic of Korea and Thailand. Study period covered is from 1991 to 2017. It is found that in case of Japan, US FDI in Japan had positive effect on exports of US to Japan. In case of all other economies no relation between US FDI and exports was observed. Thus the substitution effect was not observed in case of US FDI on US exports for the economies of China, Japan, India, Republic of Korea and Thailand.
