The Relationship between Foreign Direct Investment and Exports from the Technology Sector in Costa Rica

Author

Rodolfo Santamaria, Lynn University

Date of Award

3-2011

Document Type

Dissertation

Granting Institution

Lynn University

Degree Name

Doctor of Philosophy (PHD)

Department

College of Business and Management

First Advisor

Ralph Norcio

Second Advisor

James Miller

Third Advisor

Farideh Farazmand

Abstract

The research examined the relationship between FDI, imports and exports of the technology sector in Costa Rica. A three-stage procedure was used to examine this relationship: Testing Time Series Properties, Cointegration and Granger to estimate FDI significance and effects of FDI on technology sector exports. The results suggest an export-platform for FDI supporting that the finding may be important for Costa Rica. Also, examined were links between FDI and imports, which may show the significance effects of FDI and imports.

The study followed a causal correlational approach to analyze the relationship between FDI, imports and exports, and respective regression equations. A first step tested time series data for stationarity using Augmented Dickey-Fuller and Phillipe- Pherron; and excluding Lumsdaine and Papell to detect two-time structural breaks in the unit root analysis, because the time horizon was too narrow for reliable estimates of breaks. The second step was cointegration testing and finally, the third step is the Granger test addressed in terms of a VAR (vector auto regression) system. Granger was used to find any indication of FDI inflows causing technology sector exports to increase and technology sector imports to decrease, which may indicate the presence of an FDI exportplatform strategy and that FDI inflows into the technology sector, may cause import substitution. Secondary data for the period 1995 to 2008 was used to analyze the relationship between FDI, imports and exports of the technology sector. The finding provided important implications for Costa Rica, strategic trade and foreign investment policies.

Recommended Citation

Santamaria, R. (2011). The Relationship between Foreign Direct Investment and Exports from the Technology Sector in Costa Rica [Doctoral dissertation, Lynn University]. SPIRAL. https://spiral.lynn.edu/etds/211