The Heterogeneous Sectoral Productivity Impacts of FDI on Real Exchange Rate
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 1101-1121 |
| Journal / Publication | The Journal of International Trade and Economic Development |
| Volume | 30 |
| Issue number | 7 |
| Online published | 8 Jun 2021 |
| Publication status | Published - 2021 |
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Abstract
The Balassa-Samuelson effect provides a theoretical explanation for the deviation of the real exchange rate (RER) from its purchasing power parity based on the heterogeneous productivity growth in the tradable and non-tradable sectors. This paper bridges the literature on foreign direct investment (FDI) spillovers with the Balassa-Samuelson effect by theoretically and empirically showing that (1) the productivity impact of inward FDI is notably larger in the tradable sector than in the non-tradable sector, generating an appreciation effect on the RER; (2) the magnitude of heterogeneous productivity impacts of inward FDI in the tradable and non-tradable sectors is commensurate with the technological backwardness in the two sectors relative to the world leaders.
Research Area(s)
- foreign direct investment, productivity impacts, real exchange rate, Tradable and non-tradable sectors
Citation Format(s)
The Heterogeneous Sectoral Productivity Impacts of FDI on Real Exchange Rate. / Guo, Fei; Opoku, Eric Evans Osei; Yan, Isabel Kit-Ming.
In: The Journal of International Trade and Economic Development, Vol. 30, No. 7, 2021, p. 1101-1121.
In: The Journal of International Trade and Economic Development, Vol. 30, No. 7, 2021, p. 1101-1121.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
