Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

The Relationship Between Trade Openness and FDI - Literature review Example

Comments (1) Cite this document
There is a vast body of literature to show the cause-and-effect relationship between trade openness of a country and the growth of income. The concept that increase of trade results in increase of incomes lays the basis of endogenous, classical and neoclassical theories of growth…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER98.9% of users find it useful
The Relationship Between Trade Openness and FDI
Read TextPreview

Extract of sample "The Relationship Between Trade Openness and FDI"

Download file to see previous pages This review of literature is directed at finding the measures leading to increased foreign direct investment (FDI) for a country. Although there is a whole range of factors that cause an increase in the foreign direct investment in a country, yet one of the most significant factors has been found to be the country’s openness towards trade. Openness as a concept, has been defined in a number of ways by the researchers in the past. A comprehensive definition of openness is presented below: (t)he concept of openness, applied to trade policy, could be synonymous with the idea of neutrality. Neutrality means that incentives are neutral between saving a unit of foreign exchange through import substitution and earning a unit of foreign exchange through exports. Clearly, a highly export oriented economy may not be neutral in this sense, particularly if it shifts incentives in favor of export production through instruments such as export subsidies. It is also possible for a regime to be neutral on average, and yet intervene in specific sectors. A good measure of trade policy would capture differences between neutral, inward oriented, and export-promoting regimes. (Harrison, 1996, p. 20). Trade openness has conventionally been scaled by different researchers in different ways, but in a vast majority of cases, trade openness has been measured by its contribution to the overall gross domestic product (GDP) of a country. Factors that have conventionally been employed for the measurement of trade openness include but are not limited to intensity of import trade, intensity of export trade, intensity of trade, intensity of adjusted trade, and the intensity of real trade (Squalli and Wilson, 2006, p. 22). Three models of adjusted trade intensity have conventionally been tried to measure the trade openness. One of them is adjusted trade intensity in which the outliers having high import for the re-rexport are handled with the modification of denominator. This measure was first proposed by Andersen (1994). The second of them is adjusted trade intensity accompanied with the alternative technique to tackle the outliers as initially proposed by Frankel (2000). The third of them is adjusted trade intensity. This is a modified form of the model originally proposed by Frankel (2000). The modification was suggested by Li et al (2004). The seven measures of openness were also cited by the famous economists Kumar and Kandzija (n.d., p. 13) in their article in which they analyzed the integration and trade theory to evaluate the perspectives of trade in Western Balkans. For the purpose of this research, intensity of trade, the three models of intensity of adjusted trade as discussed before, real trade intensity, real world trade intensity (RWTI) and composite trade intensity (CTI) will be used. They will be evaluated with a view to identifying the one that is the most accurate as a measure of openness. Of all the measures, three of the most commonly employed are trade intensity (TI), import trade intensity (M/GDP) and export trade intensity (X/GDP). Trade intensity is obtained by dividing the sum of import (X) and import (M) by the GDP. According to Alcala and Ciccone (2004), the estimate generated by TI upon income is affected by the non-tradable on productivity, and is thus, biased downwards. Thus, in their opinion, it is advisable to divide the nominal trade by the real GDP. The different measures of trade openness lay the basis for a technique to find out the extent to which a country is open to the global trade as well as to the consequential advantages of income growth. For instance, the higher a country’s TI, the increased openness of its economy towards the advantages ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“The Relationship Between Trade Openness and FDI Literature review”, n.d.)
Retrieved de
(The Relationship Between Trade Openness and FDI Literature Review)
“The Relationship Between Trade Openness and FDI Literature Review”, n.d.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
hoppepreston added comment 1 year ago
Student rated this paper as
I had an issue with a literature review types of works. All until I came across this website and this particular document. Even though "The Relationship Between Trade Openness and FDI" is far from my interests, the structure is so great that I use it all the time as an example for my own works.

CHECK THESE SAMPLES OF The Relationship Between Trade Openness and FDI

Freedom Summer of 1964 and Its Relationship with the Civil Rights Movement

The other organizations which participated in this Registration campaign were the Council of Federated Organization (COFO) in league with the National Association for Advancement of Colored People (NAACP), the Congress of Racial Equality (CORE), the Southern Christian Leadership Confederation (SCLC) and the Students Non-Violent Coordination Committee (SNCC). During this campaign, large groups of African American people, supported by around 1000 white volunteers, braved the rains in order to enter the Forrest Country Courthouse to register their Voting Rights. Around 30 Summer schools were also established during this Freedom Summer Campaign in various parts of Mississippi town in order to educate the black minorities, since, due t...
11 Pages(2750 words)Case Study

The Distinction Between the Tort of Negligence and the Tort of Nuisance

There are many instances in which establishing a claim in private nuisance does not require proof of negligence and it, therefore, remains necessary to maintain the tort of private nuisance distinct from the tort of negligence. The discussion that follows will demonstrate the necessity by comparing and contrasting both torts.
The tort of negligence is founded on the principles enunciated in the House of Lords decision in Donoghue v Stevenson which essentially defines the duty of care and situations in which a breach of that duty will give rise to a claim in negligence. Lord Atkin explained that we are required to take all necessary precautions to prevent injury to our neighbours. He goes on to fully explain the duty of care i...
17 Pages(4250 words)Case Study

International Trade Theory

 Further to this, it is also believed that international trade can bring substantial economic welfare to the countries however still most of the countries do not view it as a favorable thing. Despite having a very promising and bright outlook, international trade has been largely viewed with suspension and it is because of this that governments impose barriers to restrict international trade. There can be many reasons behind this act of imposing restrictions or blocking international trade however there are also benefits on the other side too.

International trade has driven the attention of many of the brilliant minds in economics therefore the origins of the economic theory on international trade owe much to the c...
6 Pages(1500 words)Case Study

The Difference between Prudential and Protective Regulations

Governments attempt to regulate and organize different fields of life in their respective countries. This need for regulation has been created for a number of reasons. One prominent reason may be attributed to the fact that the government may assess a certain industry having a significant impact on the economy thereby embarking on a regulation endeavor. By these regulations, the government will be able to protect its markets from failure, leading to unwanted deficiencies such as monopoly, windfall profits, anti-competitive behavior, and predatory pricing.

One of the most important types of regulations that endeavor to protect consumers and restore confidence in the financial markets as being genuine is the regulation...

9 Pages(2250 words)Research Paper

Correlation between Motivation and Efficiency

It also has many warehouses to deliver chilled and frozen food to customers. It is highly unpleasant for the workers to work in the chilled warehouses. Just five years ago, one of the warehouses in Stroke-on-Trent introduced a new technical system that transformed the attitude of the workers and their efficiency.
Though the company spent almost £ 300,000 on installing a new system, it reckoned that by cutting down the mistakes and providing a better workplace for workers it could save that much amount in the first year itself. Prior to the installation of a new communication system, workers felt much boring with the old techniques of writing the movements of goods by a bit of paper and pencils. Apart from mistakes and e...
6 Pages(1500 words)Research Paper

The Trade Union Movement in the UK

Before the ERA 1999, union membership and recognition in the UK were characterized by voluntarism, in which employers and employees could bargain over the terms and conditions of employment without any legal interference. With the statutory system ushered in by the new law, voluntary recognition of unions is no longer allowed and it becomes unlawful for British employers to deny recognition to unions under any circumstances. That conveys the impression that ERA created a radical change in British industrial relations. This paper takes the contrary view, however, and proposes that while the new industrial relations law looks revolutionary in principle, there are no fundamental changes in actuality for the change to qualify as &ldqu...
8 Pages(2000 words)Case Study

Customer Relationship Management

 Consumers started looking for variety and lower prices. Through the use of technology, such customer tradeoff against variety and prices is not necessary. The US life insurance industry is large, mature and dominated by a number of large companies and this industry has been one of the early adopters of computer technology (Subramanian & Chatterjee, 2007). The advent of the CRM systems changed the landscape of the insurance industry.

The health insurance organizations use CRM to prepare health proposals and process applications in a much faster and accurate way. The organizations are better able to understand the needs and habits of the customer and provide more efficient service. Companies are able to integrat...
9 Pages(2250 words)Case Study

Relationship between Money Supply and Inflation in Saudi Arabia

Over the recent past, the effects of money supply, debt and inflation have become contentious issues for debate. Furthermore, frequent cautions concerning the risk of very large budgetary deficits aver that this would send up the upcoming state debt and capital rate as indicated by the rates (interests). As a nation, Saudi Arabia has a bi and enduring budgetary deficit over the past two decades and the government has been forced to go into the market so as to have loan access and to make up for the deficits. Given the impact of this on inflation and other economic variables, it's imperative and of great alarm for strategy architects (strategists) to understand how microeconomics has an effect on money supply, financial plan defici...
10 Pages(2500 words)Speech or Presentation

Evaluation of Children with Visual Impairment between Ages 4-12

A visually impaired child may suffer from incomplete sight, reduced vision, total blindness as well as legal sightlessness (Kelley and Gale p 45). It is a condition that may become severe in a child, thereby affecting its growth and development. The impact is usually dependent on the kind of loss, age at which it occurs, as well as the general body functioning of the child. The normal interest that is usually evident amongst children on seeing attractive items in their surroundings lacks in a visually impaired child. This may interfere with the child’s learning capabilities unless he/she is assisted to learn. The development of social behavior in children usually depends on the ability to see parents or those in charge of ca...
6 Pages(1500 words)Coursework

Macroeconomics and Trade Policys

Keynes argued that prices and wages do not determine the level of employment, as many classical economists suggested, but instead the level of aggregate demand for goods and services (Case & Fair 683). Keynes realized as well during the Great Depression that the government could intervene in the economy to attain specific employment and output goals by either increasing or decreasing taxes and government spending.

For example, raising taxes will decrease the disposable income of households and thus effectively decreasing consumption. When the government decreases consumption, the household demand for goods and services decreases thus it would only seem reasonable that the amount of output that the economy would also...
7 Pages(1750 words)Article
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Literature review on topic The Relationship Between Trade Openness and FDI for FREE!

Contact Us