In this paper, we examine the relationship between outward FDI and trades across Taiwan Strait during the period 1994Q4 to 2007Q4. We modify the export function, import function and trade function by including outward FDI variable to reflect the effect of bilateral trade between Taiwan and China. Empirical evidences indicate that the coefficient is significantly crucial to the long-run relationship. Due to the failure of a linear error-correction model (ECM) in describing the dynamics of exports and trades, we apply a nonlinear ECM to examine its dynamics and find supporting to the appropriateness of the nonlinear model empirically. Furthermore, outward FDI in percentages of Taiwan GDP was found increasing exports and decreasing imports across Taiwan Strait in percentages of Taiwan GDP. Then, the results also indicate the possibility of a positive effect of the ratio of China GDP to Taiwan GDP on the ratio of import to Taiwan GDP and a negative effect of the ratio of export to Taiwan GDP. It possibly offsets the balance of trade surplus at the same time. Finally, the bilateral trade across Taiwan Strait raises while the FDI ratio is increasing. China becomes the most important trade partner to Taiwan in recent years.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0716108-143710 |
| Date | 16 July 2008 |
| Creators | Wu, Jia-ling |
| Contributors | Yung-hsiang Ying, ching-nun Lee, Ming-Jang Weng |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0716108-143710 |
| Rights | unrestricted, Copyright information available at source archive |
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