How far is FDI relevant to India's foreign trade growth? An empirical investigation

Artikel

The study seeks to foster fresh empirical evidence on how FDI is relevant to the foreign trade growth in India under a time-varying parameter model with vector autoregres-sive specification. The Johansen's cointegration test documents a significant and posi-tive long-run co-movement between FDI and foreign trade in India. The vector error correction model suggests a unidirectional long-run causality from foreign trade to FDI. However, the Granger causality test confirms a bidirectional short-run causal relation-ship between these variables. Further, the variance decomposition analysis approves strong exogeneity of foreign trade. Again, the impulse response function analysis reveals that the responses generated from a positive shock of foreign trade to FDI and vice versa are small and initially negative and thereafter remain persistently positive at a constant level. The study finally concludes that the absence of long-run causality from FDI to export is the result of much domestic market orientation of foreign investors and less emphasis on the export-oriented sectors in India.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Economic Structures ; ISSN: 2193-2409 ; Volume: 9 ; Year: 2020 ; Issue: 30 ; Pages: 1-19 ; Heidelberg: Springer

Classification and Topics

• Classification: Wirtschaft ; Trade Policy; International Trade Organizations ; Empirical Studies of Trade ; International Investment; Long-term Capital Movements ; Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
• Subject: Foreign direct investment ; Foreign trade ; Export ; Vector autoregressive specification

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jana, Shib Sankar ; Sahu, Tarak Nath ; Pandey, Krishna Dayal
• Event: Veröffentlichung
• (who): Springer
• (where): Heidelberg
• (when): 2020

Further information

• DOI: doi:10.1186/s40008-020-00212-6
• Handle: http://hdl.handle.net/10419/261577
• Last update: 10.03.2025, 11:42 AM CET