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States (FATUS), U.S. Department of Commerce, Bureau of Economic Analysis (BEA), the

OECD, and the International Financial Statistics Yearbooks of the International Monetary Fund

(IMF).

Empirical Results

Empirical results using FIML estimation on pooled data will indicate whether there exists

a substitutionary or complementary relationship between U.S. exports and FDI of processed

foods into FTAA countries as well as their key determinants. Thus, results will provide valuable

information on the appropriate market access strategies to enhance competitiveness.

This simultaneous equation model system was estimated with cross-section and time-

series data, (e.g., two countries over 10 years (1989-1998) and one country (Brazil) over 6 years

(1993-1998). The Breusch-Pagan test for heteroscedasticity and the Durbin-Watson test for

autocorrelation were conducted. The Breusch-Pagan test rejected heteroscedasticity in both the

FDI and export equations. The Durbin-Watson test was inconclusive. Empirical results for FDI

and exports are reported in Table 1.

Table 1. Parameter Estimates of U.S. FDI Sales and Exports to Canada, Mexico, and Brazil

Intercept

-3.54* (2.15)

Exports Quantity (XQ) (metric tons)

0.16* (0.11)

Foreign Affiliates Sales (FDI) (U.S. million dollars)

--

Interest Rates (IR) (foreign IR / U.S. IR)

0.19** (0.09)

7

Variables

Foreign Affiliates Sales (FDI)

Exports (XQ)

22*** (2.7)

--

2.46*** (0.35)

--

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