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Empirical Thoughts ☑ICTEDPS AERC Mostly the step-in approach is used as suggested in different literatures that firms in manufacturing, • In the first instance trade in the foreign market as it is easier and less risky than FDI. After learning more about the economic, political and social conditions, firms may establish producing subsidiaries in the foreign market, and may eventually begin to export. This shows that the trade first cause the FDI and FDI may eventually cause trade (Johanson & Wiedersheim, 1993; Nicholas, 1982; UNCTD, 1996). This is consistent with Vernon's (1966) product cycle hypothesis. 6

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