Does foreign direct investment cause economic growth in India? An econometric analysis

Ranjeet Kumar ()
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Ranjeet Kumar: Division of Economics and Agricultural Economics, A N Sinha Institute of Social Studies, North West Gandhi Maidan, Patna 800001, India

International Journal of Financial Engineering (IJFE), 2024, vol. 11, issue 02, 1-9

Abstract: With the lack of finance, many developing nations are struggling for investment in several areas to generate an opportunity for sustainable livelihood, and Foreign Direct Investment (FDI) emerged as an engine of economic growth, especially in developing nations. It helps to strengthen the economy by mainly promoting capital inflow and technical improvement into the recipient economies. However, some literatures found economic growth, responsible for the inflow of FDI. Therefore, this paper attempts to examine the causal relationship between FDI and Economic Growth in India. By running the Granger causality test in VECM settings, this study found, GDP causes inflow of FDI in India.

Keywords: FDI; economic growth; unit root; co-integration; VECM; Granger causality (search for similar items in EconPapers)
JEL-codes: B26 C01 C22 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S2424786323500652

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