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International Trade & FDI: A Focus on FTAA

International Trade & FDI: A Focus on FTAA. Mary A. Marchant (U. of KY) Tigran A. Manukyan (U. of KY) Won Koo (No. Dakota State U.). Overview. Recent Trends in Trade & FDI Research Objectives Theoretical Model Empirical Results . Recent Trends in Trade & FDI.

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International Trade & FDI: A Focus on FTAA

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  1. International Trade & FDI: A Focus on FTAA Mary A. Marchant (U. of KY) Tigran A. Manukyan (U. of KY) Won Koo (No. Dakota State U.)

  2. Overview • Recent Trends in Trade & FDI • Research Objectives • Theoretical Model • Empirical Results

  3. Recent Trends in Trade & FDI • Evolving importance of the export market for • U.S. agriculture • FTAA

  4. Exports fell sharply during the financial crisis of the 1980s, recovering late in the decade as interest rates fell. They fell again late in the 1990s as the “Asian Flu” gripped many client nations.

  5. Recent Trends in Trade & FDI • Changing composition of U.S. agricultural export products • From bulk to processed foods

  6. Bulk commodity exports dominated agricultural exports until recent years when value added sales began to increase.

  7. ---- The FTAA (35 Countries)

  8. ---- U.S. Agricultural Exports to FTAA

  9. U.S. Ag. Exports to FTAA and to Canada, Mexico, and Brazil (Value)--- Consumer-Oriented Products

  10. --- U.S. Agricultural Exports to FTAA and to Canada, Mexico and Brazil ( CONSUMER-ORIENTED PRODUCTS )

  11. U.S. Ag. Imports from FTAA and from Canada, Mexico, and Brazil (Value)----- Consumer-Oriented Products

  12. U.S. Ag. Imports from FTAA (Value) --- Consumer-Oriented Products

  13. U.S. Ag. Trade with FTAA and with Canada, Mexico, and Brazil (Value)--- Consumer-Oriented Products

  14. Recent Trends in Trade & FDI • Changes in foreign market assess—exports vs. FDI

  15. Figure 4. U.S. Foreign Affiliate Sales (FDI Sales) and Exports of Processed Food Products

  16. Recent Trends in Trade & FDI • Evolving importance of the export market for U.S. agriculture • Processed foods • FDI

  17. Research Objectives To identify • Export & FDI determinants for FTAA countries • Relationship between exports & FDI– substitutes or complements?

  18. Data Processed foods, SIC-20 • 3 FTAA countries—Canada, Mexico, and Brazil • Annual Data • Sources—Commerce, ERS, IMF, BEA,

  19. FTAA Empirical Results FDI was influenced by • Exchange rates (+) • GDP (+) • Exports (+) • Interest rates • Compensation

  20. FTAA Empirical Results Exports were influenced by • Export prices (-) • Exchange rates (-) • GDP • FDI (+)

  21. FTAA Conclusions • Importance of exports, processed foods, & FDI for the U.S. & FTAA • Empirical Results support a complementary relationship between exports & FDI in FTAA—Canada, Mexico & Brazil • Consistent with results of Malanoski, Handy & Henderson; Somwaru & Bolling

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