Causal Relationship between Exports, FDI and Income: The case of Vietnam
AbstractThe objectives of the paper are to study foreign trade and investment dimensions of Vietnam in comparison with its competitors such as Indonesia, Malaysia, Philippines, Singapore and Thailand as also to study the role of FDI to the growth of exports in Vietnam. Vector autoregression model (VAR) is adopted to estimate the long run causal relationship among exports, foreign direct investment and GDP. The cointegration test result shows that there exist a long run equilibrium relationship among exports, FDI and GDP. It is found from the estimated Error Correction Model that FDI is a significant variable and the result indicates that 1% increase in FDI will lead to 0.25% increase in exports with one year time gap. Granger Causality Test indicates that there is a unilateral relationship between exports and FDI and the direction is from FDI to exports which mean that FDI causes exports.
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Bibliographic InfoArticle provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.
Volume (Year): 13 (2013)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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