In the global world FDI is the most prominent economic development factor for the growth of home and host countries GDP. FDI and Trade performances are positively engage in the complementarity or substitutability relationship depending on the country factors advantages and microeconomic and macroeconomic scale of economies in firm and industrial level. The main objective of this paper is to expose how outward FDI influence home country’s export performance. Previously there have been conducted a lot of empirical studies on country’s trade (export) performance and FDI flows. This project carries out to analyses aggregate regional level data and be tested by OLS and two stage-least-square (2SLS) time series regression analyses. The empirical analysis founds, outward FDI and exports are statistically positively significant in firm and industry level.

Background and Problem Discussion: FDI and Trade are playing an important role for development of country’s economy in different prospect. The effect of globalisation integrated economies facilitating cross-border trade and capital movement flows independently and creating a common huge market to serve customers geographically. Swedish outward FDI and export has positive impact on the Swedish economy. To look through the problem in this paper is that how Swedish outward FDI and exports are comprehensively performing into different regional level in the world using aggregate regional level data analyses. Purpose: The main objective of this paper is to expose how outward FDI influence Swedish export performance. Method: Quantitative research, using regional level aggregated data collected from UNCTAD, WorldBank, Riksbanken, Statistics Sweden and IMF to perform statistical analysis. Theory: in the theory and literature section, the author reviews FDI and trade trends, different theories of international economies and trade, theoretical and empirical studies by different researchers to support the primary aim of this paper. Analysis: The author have used three models on the base of the gravity model analysis using ordinary least square OLS regression and two stage-least-square 2SLS regression to examine how outward FDI influence the trade-export performance abroad at regional level. Conclusion: The performance of Swedish export positively associated with the outward foreign direct investment. Theoretically and empirically it has been proved by different scholars that outward FDI accelerates home country export positively and this is complementarity relationship between FDI and trade. It is a general concern that outward FDI would lead to substitution effect that reduces home country’s exports, job, and prosperity. Empirical study is thus necessary to verify that and this thesis research is one of them in which to conduct analysis by using aggregated, regional-level Swedish data. There was significant relationship found between FDI and exports in the empirical analysis. GDP per capita and openness of foreign market have significant effect on FDI and export performance for Sweden. Being a developed country GDP and GDP per capita has influence on FDI and trade performance. Still there needs to be done more extensive research comparing developing and developed economies FDI and Trade performances.