The long run impact of foreign direct investment, exports, imports and GDP: evidence for Spain from an ARDL approach

Verónica Cañal-Fernández () and Julio Tascón Fernández ()
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Verónica Cañal-Fernández: Department of Economics Faculty of Economics and Business University of Oviedo
Julio Tascón Fernández: Department of Economics Faculty of Economics and Business University of Oviedo

No 128, Working Papers from European Historical Economics Society (EHES)

Abstract: This paper analyses the relationship between foreign direct investment (FDI), exports and economic growth in Spain using annual time series data for the period 1970 to 2016. To examine these linkages the autoregressive distributed lag (ARDL) bounds testing approach to cointegration for the long-run is applied. The error correction model (ECM) is used to examine the short-run dynamics and the vector error correction model (VECM) Granger causality approach is used to investigate the direction of causality. The results confirm a long-run relationship among the examined variables. The Granger causality test indicates a strong unidirectional causality between FDI and exports with direction from FDI to exports. Besides, the results for the relationship between FDI and economic growth are interesting and indicate that there is no significant Granger causality from FDI to economic growth and vice-versa.

Keywords: Foreign direct investment; exports; imports; GDP; ARDL bounds; causality (search for similar items in EconPapers)
JEL-codes: C22 E31 E50 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2018-04
New Economics Papers: this item is included in nep-eec, nep-ets, nep-int, nep-knm and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:hes:wpaper:0128

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