A CONCEPTUAL LITERATURE ANALYSIS OF THE RELATIONSHIP BETWEEN FDI AND EXPORTS

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Abstract

The study investigates the theoretical and empirical literature framework that explains the relationship between foreign direct investment (FDI) and exports. Three prominent views explaining the causality relationship between exports and FDI were discussed and these include the FDI- led exports view, exports-led FDI view and the feedback view. FDI-led exports view mentions that exports can increase or decrease in direct response to changes in foreign direct investment inflows or outflows. The exports-led FDI view suggests that exports spur FDI whilst the feedback view says that both exports and FDI promote each other. The trend analysis between FDI and exports for Botswana as a case study was also looked into using time series annual data ranging from 1980 to 2011 obtained from World Development Indicators. The literature review framework analysis shows that the FDI-led exports view is more popular with most theoretical and empirical studies. It is against this background that the author recommends authorities to come up with policies that attract FDI into their economies in order to boost export sector for growth reasons.

Keywords: Conceptual Analysis, FDI, Exports, Growth

How to cite this paper: Tsaurai, K. (2013). A conceptual literature analysis of the relationship between FDI and exports. Corporate Ownership & Control, 11(1-4), 389-393. https://doi.org/10.22495/cocv11i1c4art3