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Thus, compensation rates and sales may be related. Also, high U.S. affiliate sales may stimulate

higher compensation rates by U.S. affiliates in foreign countries.

Additionally, interest rates were found to positively influence U.S. FDI, contrary to our

expectations. An increase in the number of observations would help to improve these results.


This research examined the relationship between U.S. foreign direct investment (FDI) and

exports into foreign countries for the processed food industry (SIC-20) by estimating a

simultaneous equation system for FDI and exports. The analysis focused on key FTAA

countries that import a significant portion of U.S. processed foodsCanada, Mexico, and Brazil.

Additionally, variables that influence FDI and exports were identified. Empirical results

indicated a bi-directional complementary relationship between FDI and exports into key FTAA

countries. This implies that FDI influences exports and exports influence foreign direct

investment and that U.S. agribusinesses should use both FDI and export strategies to access key

FTAA countries.


Bolling, C., and A. Somwaru. “U.S. Foreign Direct Investment in Foreign Food Industries.”

Paper presented at the American Agricultural Economic Association Annual Meeting,

Tampa, FL, July 30-August 2, 2000.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ . U . S . F o o d C o m p a n i e s A c c e s s F o r e i g n M a r k e t s T h r o u g h D i r e c t I n v e s t m e n t .

Food Review 24,3(2001):23-28.

Carter, C.A., and A. Yilmaz. “Foreign Direct Investment (FDI) and Trade – Substitutes or

Complements? An Application to the Processed Food Industry.” Paper presented at the


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