The Impact of FDI and Export on Economic Growth in India: An Empirical Analysis
Mohammed Rashid
Department of Agricultural Economics and Business Management, Aligarh Muslim University Aligarh, Uttar Pradesh, India.
Shoaib Ansari
*
Department of Agricultural Economics and Business Management, Aligarh Muslim University Aligarh, Uttar Pradesh, India.
Amir Khan
Department of Agricultural Economics and Business Management, Aligarh Muslim University Aligarh, Uttar Pradesh, India.
Mohammad Amir
Department of Agricultural Economics and Business Management, Aligarh Muslim University Aligarh, Uttar Pradesh, India.
*Author to whom correspondence should be addressed.
Abstract
This study examines the association between India's foreign direct investments, exports, imports, and Inflation onEconomic Growth in India. The autoregressive distributed lag (ARDL), bounds testing technique to co-integration over the long run, is used to investigate these connections. The error correction model (ECM) is also utilized to investigate the short-run dynamics. The findings support a long-term connection between FDI, exports,imports and Inflation onEconomic Growth. Furthermore, FDI inflows, exports and Inflation in India proved to have a positive and insignificant on Economic Growth. However, imports looked to have a negative and insignificant impact. Finally, the research recommends that a more favorable government policy toward FDI might make the Indian economy more dynamic.
Keywords: Foreign direct investment, inflation, ARDL, ECM
How to Cite
Downloads
References
Awan DA, Mukhtiar A. Agriculture productivity and economic growth: A case of Pakistan. Glob J Manag Soc Sci Humanit. 2020;6(2):492-516.
Antwi S, Zhao X. Impact of foreign direct investment and economic growth in Ghana: A co-integration analysis. Int J Bus Soc Res. 2013;3(1):64-74.
Chowdhury A, Mavrotas G. FDI and Growth: what causes what? World Economy. 2006;29(1):9-19. DOI: 10.1111/j.1467-9701.2006.00755.x
Dritsaki C, Stiakakis E. Foreign direct investments, exports, and economic growth in Croatia: A time series analysis. Procedia Econ Fin. 2014;14:181-90. DOI: 10.1016/S2212-5671(14)00701-1
Mahmoodi M, Mahmoodi E. Foreign direct investment, exports and economic growth: Evidence from two panels of developing countries. Econ Res. 2016; 29(1):938-49. DOI: 10.1080/1331677X.2016.1164922
Wang ZQ, Swain N. Determinants of inflow of foreign direct investment in Hungary and China: time-series approach. J Int Dev. 1997;9(5):695-726. DOI: 10.1002/(SICI)1099-1328(199707)9:5<695::AID-JID294>3.0.CO;2-N.
Borensztein E, De Gregorio J, Lee J. How does foreign direct investment affect Economic Growth? J Int Econ. 1998; 45(1):115-35. DOI: 10.1016/S0022-1996(97)00033-0.
Chakraborty C, Nunnenkamp P. Economic reforms, FDI, and economic growth in India: a sector level analysis. World Dev. 2008;36(7):1192-212. DOI: 10.1016/j.worlddev.2007.06.014.
Pradhan JP. FDI spillovers and local productivity growth: Evidence from indian pharmaceutical industry. Artha Vijnana. 2002;44(3-4):317-332.
Harrod R. An essay in dynamic theory. Econ J. 2015;125(583):358-77.
Domar ED. Capital expansion, rate of growth, and employment. Econometrica. 1946;14(2):137-47. DOI: 10.2307/1905364
Solow RM. A contribution to the theory of economic growth. Q J Econ. 1956; 70(1):65-94. DOI: 10.2307/1884513
Lucas RE. On the mechanics of economic development. J Monet Econ. 1988;22(1): 3-42. DOI: 10.1016/0304-3932(88)90168-7
Romer PM. Increasing returns and long-run growth. J Pol Econ. 1986;94(5): 1002-37. DOI: 10.1086/261420
Lim C. Cheng et MAISOM, A. Contribution of private foreign investments in the Malaysian manufacturing sector 1977-1995 [Faculty of Economics and Management working paper]. Malaysia: Universiti Putra Malaysia; 2000.
Lipsey RE, Weiss MY. Foreign production and exports in manufacturing industries. Rev Econ Stat. 1981;63(4):488-94. DOI: 10.2307/1935843
Lipsey RE, Weiss MY. Foreign production and exports of individual firms. Rev Econ Stat. 1984;66(2):304-8. DOI: 10.2307/1925832
Alexiou C, Tsaliki PV. Foreign direct investment-led growth hypothesis: Evidence from the Greek economy. Zagreb Int Rev Econ Bus. 2007;10:85-97.
Miankhel AK, Thangavelu SM, Kalirajan K. Foreign direct investment, exports, and economic growth in selected emerging countries: Multivariate VAR analysis. MPRA Paper, No. 22763; 2009.
Katircioglu S. Foreign direct investment and economic growth in Turkey: an empirical investigation by the bounds test for co-integration and causality tests. Ekonomskaistraživanja. 2009;22:1-9.
Belloumi M. The relationship between trade, FDI and economic growth in Tunisia: An application of the autoregressive distributed lag model. Econ Syst. 2014; 38(2):269-87. DOI: 10.1016/j.ecosys.2013.09.002
Sunde T. Foreign direct investment, exports and economic growth: ARDL and causality analysis for South Africa. Res Int Bus Fin. 2017;41:434-44. DOI: 10.1016/j.ribaf.2017.04.035
Jadaun KK, Ansari S. Agriculture productivity and economic growth in India: an Ardl model. S Asian J Soc Stud Econ. 2022;1-9.
Ansari S, Ansari SA, Rehmat A. Determinants of instability in rice production: Empirical evidence from Uttar Pradesh. Angrau. 2022;104.
Khan A, Ansari SA, Ansari S. Growth performance of major food-grain (wheat, rice and gram) in Uttar Pradesh: an economic analysis. Int J Curr Microbiol Appl Sci. 2023;12(01):196-202.
Pesaran MH, Shin Y. An autoregressive distributed lag modeling approach to cointegration analysisVol.9514.Cambridge, UK: Department of Applied Economics, University of Cambridge; 1995.
Khan A, Ansari SA, Ansari S. Rehmat, A. Fateh, M. Khan, M.S. “Growth and Trend in Area, Production, and Yield of wheat Crops in Uttar Pradesh: A Johansen Co-integration Approach. Asian J. Agric. Ext. Econ,. Soc. 2023;41(2):74-82.
WDI. World Dev Indic. 2021.
Miankhel AK, Thangavelu SM, Kalirajan K. Foreign direct investment, exports, and economic growth in selected emerging countries: multivariate VAR analysis. MPRA Paper, No. 22763; 2009.
Nagaraj R. Foreign direct investment in India in the 1990s: trends and Issues. Econ Pol Wkly. 2003;38(17):1701-12.
Pfaffermayer M. Foreign direct investment and exports: A time series approach. Appl Econ. 1994;25:335-51.
Ikram F, Alam W, Ansari S. ’A Vecm Analysis of The Determinants of FDI Inflows In india’ an International Peer-Reviewed Open Access [journal]. Indian Council Of SocialScience Research, New Delhi Sponsored Three-Day Multidisciplinary National Conference on“ VISION FOR INDIA@2047”. 2022;23:24 & 25.
Romer P. Endogenous technological change. TrimestreEconómico. 1991;58(3-231):441-80.
Roy G, Atrayee, Berg, den, van H. Foreign direct investment and economic growth: A time series approach. Economics Department Faculty. Publications. 2006; 1:21.