Theoretical and Applied Economics
No. 4 / 2018 (617), Winter
Causality between foreign direct investments and exports in India
Rajagiri Business School, Kerala, India
Abstract. This paper attempts to examine the relationship between Foreign Direct Investment and Exports from India during the period from 1990-1991 to 2014-2015. The data has been collected from the various issues of Handbook of Statistics on Indian economy, Reserve Bank of India. It was found that there was no long run co-integrating relationship between FDI inflows and exports from India. Granger causality test was used to find the causal relationship between these variables. The results revealed that there was bi-directional causality between Foreign Direct Investment and exports. This indicates that Foreign Direct Investment might be causing imports which in turn cause exports from India in the post reform period.
Keywords: foreign direct investment, exports, economic growth, cointegration, causality.
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Contents
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