FDI and Export, Substitute or Complement?

Trade and FDI are main strategies to access foreign markets. A question arises whether FDI displaces or enhances exports. Two rival hypotheses exist concerning a relation between FDI and export. (i) Substitutes: Capital mobility represented by FDI removes differences in factor endowments, hence makes an international trade less advantageous. (ii) Complements: FDI create or expand the opportunity to export. An empirical evidence exists, that both situations occur in practice, hence particular data and estimated models give a characteristics of an economy in question. Czech Republic is in focus, but the shortage of data resulted in a panel data approach. Six of the EU15 members with comparable size of export are involved, CR is pointed out by the help of a dummy variable. A simultaneous equation model is formulated distinguishing between FDI inflows and outflows. A complementarity, otherwise a movement of FDI and export in the same direction, is observed after relevant computations.