Long Run Causal Nexus between Foreign Direct Investment and Foreign Trade in India

The Icfai Journal of Applied Economics, Vol. 6, No. 5, pp. 7-20, September 2007

Posted: 28 Nov 2007 Last revised: 3 Nov 2016

See all articles by Durairaj Kumarasamy

Durairaj Kumarasamy

Consultant, ASEAN India Centre, Research and Information System for Developing Countries

K. Sham Bhat

Pondicherry University

Multiple version iconThere are 2 versions of this paper

Abstract

This paper employs cointegration technique and error correction model to examine the long run causal nexus between foreign direct investment and foreign trade (imports and exports) in India. The databases are on monthly basis and it covers the period from July 1992 to October 2003. By and large, the analysis reveals that there is a one-way causal linkage from import to foreign direct investment and it is consistent with the traditional step-by-step sequences of servicing foreign markets, and that there is also a unidirectional causality from export to foreign direct investment and it may be due to the outward-oriented export-led development policy that attracts foreign direct investment inflow in India in the short run.

Suggested Citation

Kumarasamy, Durairaj and Sham Bhat, K., Long Run Causal Nexus between Foreign Direct Investment and Foreign Trade in India. The Icfai Journal of Applied Economics, Vol. 6, No. 5, pp. 7-20, September 2007, Available at SSRN: https://ssrn.com/abstract=1033246

Durairaj Kumarasamy

Consultant, ASEAN India Centre, Research and Information System for Developing Countries ( email )

India Habitat Centre
Lodhi Road
New Delhi, 110 003
India
8287254499 (Phone)
8287254499 (Fax)

HOME PAGE: http://www.ris.org.in

K. Sham Bhat (Contact Author)

Pondicherry University ( email )

Pondicherry 605 014
India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
233
PlumX Metrics