@article{Cardamone:123993,
      recid = {123993},
      author = {Cardamone, Paola and Scoppola, Margherita},
      title = {Trade costs and the pattern of Foreign Direct Investment:  evidence from five EU countries},
      address = {2012-06},
      number = {1051-2016-85884},
      pages = {12},
      year = {2012},
      abstract = {According to the theoretical models of the multinational  enterprise, trade costs play a fundamental role in  determining the pattern of foreign direct investment (FDI).  The aim of this paper is to assess the impact of trade  policies on the outward stocks of FDI of the EU. We  estimate a model based on the knowledge-capital theory of  the multinational enterprise over the period 1995-2008 by  using a sample of five EU countries and 26 partner  countries. We consider, first, manufacturing sector as a  whole and, then, six manufacturing industries defined at  the two-digit level of the NACE classification. Explanatory  variables include an index of applied bilateral tariffs and  a dummy to capture the presence of Bilateral Investment  Treaties (BITs). From an econometric point of view, a  dynamic panel model is estimated through the generalized  method of moments (GMM) estimator, taking also into account  the heterogeneity bias and the endogeneity of regressors.  The results show that that the pattern of the outward FDI  is a mix of vertical and horizontal FDI. BITs in force have  a significant and positive impact on the outward FDI. The  impact of tariffs varies across industries, suggesting the  predominance of horizontal in some industries and the  existence of vertical FDI in others.},
      url = {http://ageconsearch.umn.edu/record/123993},
      doi = {https://doi.org/10.22004/ag.econ.123993},
}