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The Interrelationship Between Merchandise Trade, Economic Growth and FDI Inflows in India

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  • Mousumi Bhattacharya

    (Army Institute of Management, India)

  • Sharad Nath Bhattacharya

    (Army Institute of Management, India)

Abstract

The purpose of the paper is to investigate whether the volume of merchandise trade and FDI inflows influences economic growth. The period of the study is 1996-97:Q1 to 2008-09:Q3. After investigating the stationarity of the variables, cointegration analysis has been conducted followed by VECM analysis and Granger Causality Test. The variables are I(1) processes. While unidirectional causality is observed from merchandise trade to economic growth, feedback causality has been observed between FDI inflows and economic growth.

Suggested Citation

  • Mousumi Bhattacharya & Sharad Nath Bhattacharya, 2011. "The Interrelationship Between Merchandise Trade, Economic Growth and FDI Inflows in India," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 9(2), pages 229-244.
    • Handle: RePEc:seb:journl:v:9:y:2011:i:2:p:229-244
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI inflows; Multivariate Granger Causality Test; VECM; Co-integration Analysis; Economic growth.;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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