ABSTRACT
The trade effects of foreign direct investment (FDI) may differ substantially among host countries and branches of manufacturing industries. The importance of intra-firm trade for exports from Japan, the US and - as far as data permit - European Communities member countries to markets in industrialized and developing countries is reviewed for individual industries and related to the pattern of FDI among host countries. The relationship between FDI and exports is even more pronounced if only trade in intermediate products is considered. The most remarkable element in shares of intra-firm trade in manufactured exports common to all three home countries is the wide divergence in intra-firm shares between different manufacturing industries. If trade-creating effects of FDI dominate substitution effects, the regressions should yield positive export multipliers for FDI of the home country under investigation and negative coefficients for FDI of competing industrialized countries.
