Does causality between FDI and trade exist: evidence from South Asia?

Ranjan Kumar Dash and Chandan Sharma

International Journal of Trade and Global Markets, 2010, vol. 3, issue 4, 390-413

Abstract: This study has twin objectives: first, to investigate the interrelationship between export and Foreign Direct Investment (FDI). Second, we test the causal linkage with import and FDI. For this purpose, we select four major South Asian countries, namely India, Bangladesh, Sri Lanka and Pakistan. The study is based on Granger non-causality test of Toda and Yamamoto (1995) for the period 1990Q1-2007Q4. The evidence shows that there is a bi-directional causality between FDI and Trade. Specifically, our analysis indicates for interrelations between export and FDI as well as between import and FDI in the region. This may reflect the fact that import has played a crucial role in export growth in South Asia. Overall, the results indicate a complementary relationship between FDI and Trade.

Keywords: FDI; foreign direct investment; international trade; causality; South Asia; exports; causal linkages; imports; India; Bangladesh; Sri Lanka; Pakistan; Clive Granger; non-causality test; Toda; Yamamoto; bi-directional causality; export growth; globalisation; global markets. (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=35757 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijtrgm:v:3:y:2010:i:4:p:390-413

Access Statistics for this article

More articles in International Journal of Trade and Global Markets from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().