Foreign Direct Investment Inflow Into Partner Countries

ã€â€"FDIã€â€"_. represents the foreign direct investment inflow into partner countries (in current USD). An inflow of cash will lead to a temporary financial solvency in recipient countries, which enables the consumers of those countries to buy more differentiated products. However, because it is a temporary cash inflow, the FDI inflow might have an inverse effect as well and therefore the predicted sign for this variable was indeterminate. The results of regression analysis indicate that the FDI coefficient is -0.03 which indicates a negative relationship with the logistic transformation of IIT, but the parameter estimate is statistically insignificant. DIST denotes the distance between Washington D.C. and capital cities of the U.S. trading†¦show more content†¦The interpretation of the result is that a one percent increase in EXRT results in a 0.01 percent increase in IIT intensity relative to INT, thus confirming Hypothesis 6. RD represents the cost of research and development as a percentage of partner country’s GDP, and used as proxy for the level of technological development of the U.S. trading partner. An increase in technological development would be expected to enhance a country’s capability to produce more differentiated products which would lead to more IIT. The results indicate the RD parameter estimate is positive and statistically significant at the one percent level. This confirms, Hypothesis 7, which states that an increase in RD investment is associated with an increase in the IIT intensity relative to INT. ARB denotes the amount of available arable land of partner countries in hectares. It is used as proxy for factor endowment. A partner country with large fertile arable land may have more agricultural trade because large arable land allows that country to produce more products and fertile land helps to produce high quality verities, which ultimately leads to more IIT. In contrast, if the land is not fertile then country will not be able to produce enough products for trade and quality of the product will be low. Then even though having large arable land, it might affect negatively on IIT. Therefore, thisShow MoreRelatedJapans Actual Level Of Exports1184 Words   |  5 PagesCountry: Japan Company: Buffalo Wild Wings Trade and FDI Analysis What are levels (amounts) of trade (exports and imports) in your target country? Japan’s actual level of exports is 6417.36 billion Japanese Yen. In the past 5 years, exports have ranged from 4513.66 billion Japanese Yen, up to 6926.83 billion Japanese Yen (Japan Exports). Japan’s actual level of imports is 6531.14 billion Japanese Yen. 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