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Do the FDI, Economic growth and Trade affect each other for India: An ARDL Approach

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  • Singh, Anshul

Abstract

This paper examines the dynamic causal relationships between foreign direct investment (FDI), trade and economic growth in India by applying the bounds testing (ARDL) approach to cointegration for the period from 1970 to 2012. The bounds tests suggest that the variables of interest are bound together in the long-run when GDP per capita is the dependent variable. The empirical findings confirm that there is bi-directional Granger causality between FDI and trade, unidirectional Granger causality running from FDI to economic growth and from economic growth to capital investment but there is no Granger causality from economic growth to FDI and capital investment to per capita GDP.

Suggested Citation

  • Singh, Anshul, 2013. "Do the FDI, Economic growth and Trade affect each other for India: An ARDL Approach," MPRA Paper 51447, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51447
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI; trade openness; economic growth; ARDL cointegration; ECM; India;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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