FDI and intra-industry trade: theory and empirical evidence from the Visegrad Countries

This paper analyses impact of the foreign direct investment (FDI) on the intra-industry trade (IIT) patterns in the Visegrad Countries (VCs) (the Czech Republic, Hungary, Poland and Slovakia) in the period 1995–2008. The FDI has been a driving force of these countries’ foreign trade, especially for the IIT. From the theory and previous empirical studies, it results that the FDI has a positive impact on vertical intra-industry trade (VIIT), while the influence of this variable on horizontal intra-industry trade (HIIT) is ambiguous. Using a panel data approach, the determinants of HIIT and VIIT were identified. The obtained results confirmed that the FDI in the VCs stimulated not only VIIT, but also HIIT.