Commercial Surveys

Commercial Surveys

Accession to the WTO and Its Impact on Attracting Export-Oriented FDI: The Experience of Selected Developing Countries

Document Type : Original Article

Authors
Mohammad Hassan Zare 1
Fatemeh Mirhoseini 2
1 Assistant Professor in Economics, Department of Economics, Yazd University Yazd, Iran
2 MA Student of Economics, Department of Economics, Yazd University, Yazd, Iran.
10.22034/bs.2024.2025768.2949
Abstract
Foreign direct investment is typically pursued with the objective of gaining control over the host nation's market or enhancing its export activities. The primary aim of this study is to investigate whether the influx of foreign direct investment into developing countries that are members of the World Trade Organization (WTO) has led to an expansion in their exports. A total of 11 acceded developing nations were chosen, with the selection criteria based on data availability. The analysis focused on the timeframe spanning from 2005 to 2020. To address the research inquiry, two distinct models were developed and evaluated. These models were both subjected to generalized least squares estimation and analyzed within the framework of regression models incorporating fixed effects for time. Using the first model, it was investigated whether trade liberalization through joining the World Trade Organization has caused the growth of foreign investment in the mentioned countries or not. The results of this estimate confirmed the positive impact of trade liberalization on foreign investment. In other words, the experience of trade liberalization of the mentioned countries does not indicate the relationship of import substitution and foreign investment, but the relationship of these two was complementary. Then, in the second model, the effect of foreign investment on the exports of these countries was investigated. The results showed that foreign investment had a positive and significant effect on the exports of developing countries that joined the World Trade Organization. Hence, joining of developing nations to this international organization caused a boost to FDI attraction focused on exports. Furthermore, empirical analyses indicate that entry into the WTO has contributed to the expansion of the gross domestic product (GDP) of these nations.
 
Keywords
Exports/ Foreign Direct Investment/ World Trade Organization/ / Feasible Generalized Least Squares

Subjects

 
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Commercial Surveys
Volume 22, Issue 126 - Serial Number 126
July and August 2024
Pages 1-34

  • Receive Date 31 March 2024
  • Revise Date 21 May 2024
  • Accept Date 01 June 2024