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Asymmetric and Symmetric Link between Quality of Institutions and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach

Faheem Ur Rehman, József Popp, Ejaz Ahmad, Muhammad Asif Khan and Zoltán Lakner
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Faheem Ur Rehman: Graduate School of Economics and Management, Ural Federal University, Mira 19, 620002 Ekaterinburg, Russia
József Popp: Hungarian National Bank–Research Center, John von Neumann University, 6000 Kecskemét, Hungary
Ejaz Ahmad: Department of Economics, Kohat University of Science and Technology, Kohat 26064, Pakistan
Muhammad Asif Khan: Department of Commerce, Faculty of Management Sciences, University of Kotli, Kotli 11100, Pakistan
Zoltán Lakner: Department of Food Chain Management, Institute of Agribusiness, Hungarian University of Agriculture and Life Sciences, 2100 Gödöllő, Hungary

Sustainability, 2021, vol. 13, issue 24, 1-0

Abstract: This study explores the bicausality between institutional quality and FDI inflow both aggregated and sector-wise, i.e., the agricultural, manufacturing, and tertiary sectors in the Indian economy, by applying simulated autoregressive distributed lag (SARDL) dynamic new techniques, an extended variant of orthodox ARDL and NARDL. The study confirms that aggregated and sectorial FDI are enhanced by adequate institutional quality, and similarly, FDI promotes quality institutions. The nexus between institutional quality and FDI inflow is an inspiration for India to compete with developed economies by enhancing its institutional quality. The study observes cointegration and bidirectional causality between institutional quality and aggregated FDI.

Keywords: sectorial FDI inflow; institutional quality; simulated ARDL dynamic; India (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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