The Role of Foreign and Domestic Investment in Promoting Exports and Imports. A Dynamic Panel Approach

The goal of this paper is to evaluate weather domestic or foreign investments are involved in the promotion of exports and imports in eight of the newest European Union member states. We apply the dynamic panel data model for identifying the determinants of both exports and imports in the period 1999-2013. Our main result point that there is a complementary relationship between FDI and both exports and imports. The EU membership is significant for the expansion of the trade activity but is more relevant for the export activity than for the import one.JEL Classification: C36, F14, F2