FOREIGN OUTWARD DIRECT-INVESTMENT AND EXPORTS IN AUSTRIAN MANUFACTURING - SUBSTITUTES OR COMPLEMENTS

The relationship between foreign outward direct investment and exports is crucial for assessing the impact of increased internationalization by foreign outward direct investment on a country's welfare. Three mo dels of trade and FDI are reviewed to generate hypotheses on their dir ect relationship over time as well as on common determinants. The prop ositions are empirically examined with time-series cross-section data for Austrian manufacturing. The results indicate a significant complem entary relationship between FDI and exports in the eighties and early nineties. Moreover, long-run multipliers of exogenously increased FDI and exports are calculated. They are found to be positive but small in magnitude.