Foreign Direct Investment Impacts on Export Performance
Summary
Foreign direct investment (FDI) shapes export performance by introducing capital, technology and managerial practices from multinational enterprises into host economies. Such inward investment often fuels productivity gains through knowledge spillovers, enabling domestic firms to upgrade product quality and diversify their export baskets. Integration into global value chains amplifies these effects by linking local suppliers and producers to international markets. However, the magnitude and direction of FDI’s impact depend on the mode of investment (for example, greenfield projects versus mergers and acquisitions), the absorptive capacity of domestic firms and the quality of national institutions. In many emerging and developing economies, FDI has been associated with expanded export volumes, longer product survival in foreign markets and enhanced competitiveness, although outcomes can be uneven across sectors and regions. Exchange-rate flexibility, infrastructure quality and human capital development further mediate how effectively FDI translates into sustained export growth. Policymakers therefore seek to design incentive structures and regulatory frameworks that balance openness to foreign capital with support for local entrepreneurship and skills upgrading.
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Foreign Direct Investment Impacts on Export Performance publication trend
The graph below shows the total number of articles in foreign direct investment impacts on export performance across all publications each year (not limited to Nature Index journals).
Technical terms
Foreign Direct Investment (FDI): Cross-border investment by a firm in which the investor obtains a lasting interest (typically 10% or more equity) and managerial influence in a foreign enterprise.
Export Performance: A measure of a country’s success in international markets, usually assessed by export volume, export growth rate, export diversification and export survival duration.
Global Value Chain (GVC): A network of production stages that span multiple countries, through which intermediate and final goods pass before reaching the end consumer.
Greenfield Investment: A form of FDI involving the establishment of new production facilities or enterprises in the host country, as opposed to acquiring existing assets.
Export Survival: The length of time a product or firm continues to export successfully to a particular destination market, reflecting resilience and competitiveness.
References
- Sustainable FDI and comparative advantage for product export survival: a developing countries perspective. Economic Research-Ekonomska Istraživanja (2023).
- The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia. Cogent Economics & Finance (2021).
- The role of Chinese investments in the bilateral exports of new E.U. member states and Western Balkan countries. Economic Research-Ekonomska Istraživanja (2018).
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