Empirical study on the impact of foreign direct investment on exports: The Bayes approach and consider the role of intermediary factors

Abstract

The article aims to analyze the impact of foreign direct investment on export activities of countries around the world when considering the role of exchange rates and accession to the World Trade Organization (WTO). The Bayesian method is used to process data from 40 countries in the period 1995- 2021, including 20 countries belonging to the WTO and 20 countries not belonging to the WTO. Research results show that FDI has a positive impact on countries' exports, especially for countries that have joined the WTO and when that country's real exchange rate decreases. Besides, the inflation rate, GDP growth rate, and trade openness have an impact on increasing exports. Domestic investment capital has the effect of inhibiting the export activities of countries. The government and policymakers need to focus on creating a favorable environment for foreign investors such as: Towards one-stop service; Support research and development of export products; Have an appropriate foreign policy. Besides, it is necessary to have a timely exchange rate adjustment policy to promote export activities.