Does Inward FDI Lead to Export Performance in India? An Empirical Investigation

Saileja Mohanty and Narayan Sethi

Global Business Review, 2021, vol. 22, issue 5, 1174-1189

Abstract: This article investigates whether or not inward foreign direct investment (FDI) leads to export performance in India over the time period 1980—2017. We use Augmented Dickey–Fuller and Phillip–Perron unit root test to check the stationarity, and it confirms that all the variables are stationary at first differences I(1). The auto regressive distributed lag (ARDL)-bound testing co-integration approach confirms that there is no valid long-run relationship between considered variables. Results indicate the insignificant negative impacts of FDI on real exports in long run but not in short run. Result of Granger causality test confirms that there is a unidirectional causal relationship existing between the variables where FDI has a Granger cause to export. Results of stability test suggest that there is no structural instability in the residuals of equation of real exports. FDI does not work uniformly in all sectors, and policymakers should understand the difference and identify their sector-wise policies relating with FDI. The law and order should also be maintained, which is the essential part to attract the foreign investors. At this stage, we can also set the direction of future research, that is, sector-wise study should be done on the relationship between FDI and exports.

Keywords: Foreign direct investment; export; economic growth; India (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0972150919832770 (text/html)

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:sae:globus:v:22:y:2021:i:5:p:1174-1189

DOI: 10.1177/0972150919832770

Access Statistics for this article

More articles in Global Business Review from International Management Institute
Bibliographic data for series maintained by SAGE Publications ().