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Does Foreign Direct Investment Effect over Export Growth in Long Run in India: A Co-integration Analysis

ANWESH: International Journal of Management & Information Technology

Volume 2 Issue 1

Published: 2017
Author(s) Name: Amit Saini, Pankaj Madan, S. K. Batra | Author(s) Affiliation:
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Abstract

Export growth in domestic country is associated with several factors including foreign direct investment that significantly contributes in faster export promotion. Since 1991, the New Economic Policies (NEPs) fetched the uninterrupted foreign investment to India than before. Within this framework, this paper is prepared to measure the effect of FDI inflow over export promotion. Using annual data series from 1991-2012, we investigate the effect of FDI over export growth in India with employing co-integration statics. Results support the Export increases in many folds in long run when FDI comes. However, the causality test reports, there is bi-directional relation which suggest both export and foreign direct investment are motivator factor to each other variable.

Keywords: Bi-directional relation, Causality test, Co-integration statics, Export growth, Foreign investment

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