Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia?
The existing literature has highlighted the positive effect of foreign direct investment (FDI) on export upgrading and associated terms of trade in developing economies. However, the FDI effect has been found to be negative in South Asia. In this paper, we elaborate on the South Asia-specific effect...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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World Scientific Publishing
2016-03-01
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| Series: | Asian Development Review |
| Subjects: | |
| Online Access: | https://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00060 |
| _version_ | 1819010634025533440 |
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| author | Konstantin M. Wacker Philipp Grosskurth, Tabea Lakemann |
| author_facet | Konstantin M. Wacker Philipp Grosskurth, Tabea Lakemann |
| author_sort | Konstantin M. Wacker |
| collection | DOAJ |
| description | The existing literature has highlighted the positive effect of foreign direct investment (FDI) on export upgrading and associated terms of trade in developing economies. However, the FDI effect has been found to be negative in South Asia. In this paper, we elaborate on the South Asia-specific effect by emphasizing the role of human capital in the positive link between FDI and terms of trade. We argue that education levels in South Asia have lagged behind those in East Asia and other developing regions. This has resulted in a world market integration strategy in South Asia that specializes in less skills-intensive products and generates associated FDI flows. We demonstrate these patterns for two South Asian economies (Bangladesh and Pakistan) and two East Asian economies (Malaysia and Thailand) for which historical breakdowns of FDI data are available. |
| first_indexed | 2024-12-21T01:15:22Z |
| format | Article |
| id | doaj.art-8019c73576b44373af798d41a530b220 |
| institution | Directory Open Access Journal |
| issn | 0116-1105 1996-7241 |
| language | English |
| last_indexed | 2024-12-21T01:15:22Z |
| publishDate | 2016-03-01 |
| publisher | World Scientific Publishing |
| record_format | Article |
| series | Asian Development Review |
| spelling | doaj.art-8019c73576b44373af798d41a530b2202022-12-21T19:20:47ZengWorld Scientific PublishingAsian Development Review0116-11051996-72412016-03-01331285510.1162/ADEV_a_00060ADEV_a_00060Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia?Konstantin M. Wacker0Philipp Grosskurth,1Tabea Lakemann2Konstantin M. Wacker (corresponding author): Assistant Professor, University of Mainz. E-mail: kwacker@uni-mainz.dePhilipp Grosskurth: Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI). E-mail: philipp.grosskurth@rwi-essen.deTabea Lakemann: GIGA German Institute of Global and Area Studies and University of Goettingen. E-mail: lakemann@giga-hamburg.de.The existing literature has highlighted the positive effect of foreign direct investment (FDI) on export upgrading and associated terms of trade in developing economies. However, the FDI effect has been found to be negative in South Asia. In this paper, we elaborate on the South Asia-specific effect by emphasizing the role of human capital in the positive link between FDI and terms of trade. We argue that education levels in South Asia have lagged behind those in East Asia and other developing regions. This has resulted in a world market integration strategy in South Asia that specializes in less skills-intensive products and generates associated FDI flows. We demonstrate these patterns for two South Asian economies (Bangladesh and Pakistan) and two East Asian economies (Malaysia and Thailand) for which historical breakdowns of FDI data are available.https://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00060developmentFDIPrebisch–Singer hypothesisterms of trade |
| spellingShingle | Konstantin M. Wacker Philipp Grosskurth, Tabea Lakemann Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia? Asian Development Review development FDI Prebisch–Singer hypothesis terms of trade |
| title | Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia? |
| title_full | Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia? |
| title_fullStr | Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia? |
| title_full_unstemmed | Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia? |
| title_short | Foreign Direct Investment, Terms of Trade, and Quality Upgrading: What Is So Special about South Asia? |
| title_sort | foreign direct investment terms of trade and quality upgrading what is so special about south asia |
| topic | development FDI Prebisch–Singer hypothesis terms of trade |
| url | https://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00060 |
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