Time Series Analysis of Foreign Direct Investment and Economic Growth: A Case Study of India
International Conference on Innovative Business Practices for Creating Value in Global Era (pp. 148-153). Indore, Madhya Pradesh, India: Acrololis Faculty of Management & Research, ISBN: 978-81-928573-1-2, DOI: 10.13140/RG.2.1.1159.5600
14 Pages Posted: 13 Jan 2016 Last revised: 16 Jan 2016
Date Written: 2014
The study investigates the relationship between the foreign direct investment (FDI) and Gross Domestic Product (GDP) over the period 1975-2013. Granger causality test & Johansen’s co-integration test have been applied to explore the direction of causality & long run relationship between the variables foreign direct investment (FDI) and gross domestic product (GDP). The result shows that the FDI and the GDP are co-integrated and, hence, a long-run equilibrium relationship exists between them. It is observed that the FDI positively relate to GDP. In the Granger causality sense, FDI causes the GDP in the both long-run and short-run. There is bidirectional causality exists between FDI and GDP.
Keywords: FDI, GDP, Causality Test, Co-integration Test
JEL Classification: C22, E11, F43, O11
Suggested Citation: Suggested Citation