Causal Relationship between Foreign Direct Investment, Growth and Exports: An Anecdote from Oecd Countries
Anil Kumar Goyal1, Namita Rajput2
1Anil Kumar Goyal, Professor, Rukmini Devi Institute of Advanced Studies, New Delhi, India.
2Dr Namita Rajput*, Principal (OSD), Sri Aurobindo College (E), University of Delhi, India.
Manuscript received on November 20, 2019. | Revised Manuscript received on November 28, 2019. | Manuscript published on 30 November, 2019. | PP: 6584-693 | Volume-8 Issue-4, November 2019. | Retrieval Number: D8363118419/2019©BEIESP | DOI: 10.35940/ijrte.D8363.118419
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: In the globalised world of today there is a process of integration between the countries and one way of integrating is by trade. In this instance export led growth surfaces and arises as an imperative factor. In the related pretext works offers rich acumens regarding role of Foreign Direct Investment and economic growth. In this paper we study the causal relationship between Foreign Direct Investment (FDI) and Exports on Growth of select 30 OECD countries. As a measure of economic growth Industrial Production Index (IPI) is used in the study. To examine the relationship Augmented Dickey Fuller Test and Phillip Perron Test was employed to test the unit Root and to examine the long term equilibrium relationship and direction of causality Johansen’s cointegration test and Granger causality was used. The study reveals important cointegrating relationship between IPI and FDI and IPI and Exports in 22 and 23 sample OECD countries respectively. In Granger lead relationship between IPI and FDI three bilateral relationships were revealed in Canada, Czech Republic and Spain and 16 Unilateral relationships were revealed in the same .In granger led relationship between FDI and IPI only 9 Unilateral relationships were revealed. In IPI and Exports only one bilateral Granger lead relationship was revealed in Finland followed by 6 unilateral relationships. In granger lead relationship between Exports and IPI 16 Unilateral relationship was exhibited. Hence to achieve economic growth FDI and exports are majorly instrumental. The empirical findings suggest that OECD countries should continue the policy aimed at attracting FDI and expanding the exports sector in FDI led Growth and exports led growth. This study has some major implications in strategizing FDI and export policies for OECD region.
Keywords: Image Processing and Pattern Recognition.
Scope of the Article: Wireless Power Transmission.