Foreign Direct Investment and Current Account Deficit - A Causality Analysis in Context of India

2012 ◽  
Vol 13 (2) ◽  
pp. 85-106
Author(s):  
Manpreet Kaur ◽  
Surendra Yadav ◽  
Vinayshil Gautam
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Current Account ◽  
Direct Investment ◽  
Current Account Deficit ◽  
Impulse Response Function ◽  
Causality Analysis ◽  
Long Run ◽  
The Impact ◽  
The Relationship

Current Account Deficit is one of the major macroeconomic problems facing India. In this paper, we have tried to investigate the relationship between Foreign Direct Investment (FDI) and current account in the context of India. Using the Toda-Yamamoto (T-Y) granger causality technique for the period 1975-2009, our results indicate that FDI and current account are co-integrated in the long run. There is evidence of unidirectional causality from FDI to current account. Furthermore, the analysis of FDI and international trade components (Exports and Imports), which are the major constituents of current account, supports our results of granger causality. Also, an attempt has been made to provide for the impact of FDI on current account through impulse response function.

scholarly journals Foreign Direct Investment, External Debt, and Balance of Payment: A Causality Analysis for Bangladesh

2020 ◽  
Author(s):  
Muhammad Mahmud Mostafa
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Negative Impact ◽  
External Debt ◽  
Causality Analysis ◽  
Causality Test ◽  
Long Run ◽  
Significant Negative Impact ◽  
Short Run

The purpose of this study is to analyze the causal relationship of external debt and balance of payment with foreign direct investment (FDI) in Bangladesh for the period of 1980 to 2017 through the application of Johansen Cointegration technique, Vector Error Correction Model (VECM), and Granger Causality approach. Results of cointegration and VECM indicate a significant long-run relationship between dependent (FDI) and independent variables (external debt and balance of payment). External debt is found to have a significant negative impact on FDI in the long-run, but it is found insignificant in the short-run. In contrast, the balance of payment has a significant positive effect on FDI both in the long-run and short-run. Results of the Granger causality test reveal that there exists bidirectional short-run causality between the balance of payment and FDI; that is, both the balance of payment and FDI affect each other. But no unidirectional or bidirectional short-run causality is found between external debt and FDI. Keywords: FDI, external debt, balance of payment, cointegration, VECM, causality

scholarly journals Examining the impact of Exports and Exchange rate on Economic Growth of Turkey

2020 ◽  
Author(s):  
Iftikhar Muhammad ◽  
Malik Shahzad Shabbir
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Economic Policies ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
The Impact

Abstract Purpose This study intends to analyze the long-run and short-run relationships along with the identification of causal links between exports, economic growth, and exchange rate in Turkey. Data/Design: This study uses auto-regressive distributed lags (ARDL) and Granger causality over time series monthly data from the year 2010–2018. The results indicate that exports are significantly positively related to economic growth while the exchange rate is found to be negatively related to economic growth. Findings: Moreover, findings from the test of Granger causality indicate that a unidirectional causal association is found from exports to foreign direct investment and economic growth and from economic growth to foreign direct investment. The Granger causality results indicate that an increase in exports accelerates the economic growth of Turkey and a change in growth rate and exchange rate leads to a change in foreign direct investment. Originality of work: The overall findings suggest that exports should be promoted along with the liberal-investment economic policies to boost the overall economic growth in Turkey.

scholarly journals Investigating the Relationship between Unemployment and Inflation in Nigeria

2021 ◽  
Vol 04 (03) ◽  
Author(s):  
Charity I. Anoke I. Anoke ◽  
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Economic Status ◽  
Government Expenditure ◽  
Negative Relationship ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
The Impact

This study considered the impact of inflation on unemployment in Nigeria viz avis selected macroeconomic variables. The researcher adopted co integration, vector error correction model and VEC Granger causality test econometric procedure in the analysis of the data employed. The specific objectives of the study are; (i) to determine the extent to which inflation impact on unemployment in Nigeria within the period of study, (ii) to examine if government expenditure have any significant impact on unemployment in Nigeria within the period of study, (iii) to estimate the significant impact of foreign direct investment on unemployment in Nigeria within the period of study; (iv) to investigate the extent of direction of causality between unemployment and inflation in Nigeria within the period of study. The results of the research revealed long run relationship among estimated variables, VECM result showed a positive significant relationship between inflation and unemployment in the short run and long run, government expenditure and foreign direct investment maintained negative relationship with unemployment both in the short and long run. The VEC Granger causality test indicated causality among UNEM, INF and TGEX. The research recommended that (i) government should focus on policy and strategy that can attract foreign direct investment into the country, (ii) government should try to maintain low inflation rate through suitable monetary policy; (iii) government should encourage investment platforms and enabling environment for effective and efficient national output; and (iv) Government should consciously increase fiscal space for capital activities and projects that are capable of generating income, increase domestic and public spending, improve economic status and reduce unemployment. This paper concluded that the Philip’s curve hypothesis does not apply in Nigeria within the period of study as the result failed to establish an inverse relationship as postulated by A.W. Philips.

scholarly journals The Impact of Foreign Direct Investment on Trade (Export and Import) in Turkey

2019 ◽  
Vol 5 (1) ◽  
pp. 6
Author(s):  
Mehman Karimov
Keyword(s):  
Foreign Direct Investment ◽  
International Trade ◽  
Granger Causality ◽  
Direct Investment ◽  
Empirical Studies ◽  
Causality Test ◽  
Lag Selection ◽  
Causality Tests ◽  
The Impact ◽  
The Relationship

It is said that after globalization processes foreign direct investment start to influence trade moreover it is very complicated to deduce the relationship between trade and FDI according to theoretical analysis. Therefore, empirical studies showed that until the 1980s international trade generated direct investment but after 1980s FDI started to heavily influencing international trade. Also, results showed that the relationship can differ from one country to another. Thus, this paper is aimed to analyze the impact of Foreign Direct Investment inflow on the macroeconomic variable as a Trade (Export, Import) in Turkey. The paper covers the time period from 1974 to 2017. The time series datasets, those are obtained from World Bank and IMF database are utilized in employed statistical models as ADF Unit Root, VAR lag selection, Johansen co-integration, and the Granger Causality tests, to fulfill empirical part of the paper. Based on results, it was confirmed that there was the presence of the co-integration between analyzed series. Additionally, results of Granger causality test showed that there is unidirectional causality from Export and Import to FDI.

scholarly journals The Impact of Foreign Direct Investment on Trade (Export and Import) in Turkey

2019 ◽  
Vol 5 (1) ◽  
pp. 6
Author(s):  
Mehman Karimov
Keyword(s):  
Foreign Direct Investment ◽  
International Trade ◽  
Granger Causality ◽  
Direct Investment ◽  
Empirical Studies ◽  
Causality Test ◽  
Lag Selection ◽  
Causality Tests ◽  
The Impact ◽  
The Relationship

It is said that after globalization processes foreign direct investment start to influence trade moreover it is very complicated to deduce the relationship between trade and FDI according to theoretical analysis. Therefore, empirical studies showed that until the 1980s international trade generated direct investment but after 1980s FDI started to heavily influencing international trade. Also, results showed that the relationship can differ from one country to another. Thus, this paper is aimed to analyze the impact of Foreign Direct Investment inflow on the macroeconomic variable as a Trade (Export, Import) in Turkey. The paper covers the time period from 1974 to 2017. The time series datasets, those are obtained from World Bank and IMF database are utilized in employed statistical models as ADF Unit Root, VAR lag selection, Johansen co-integration, and the Granger Causality tests, to fulfill empirical part of the paper. Based on results, it was confirmed that there was the presence of the co-integration between analyzed series. Additionally, results of Granger causality test showed that there is unidirectional causality from Export and Import to FDI.

scholarly journals Effect of Foreign Direct Investment on Bangladesh Economy: a Time Series Analysis from 1972 to 2013

2020 ◽  
Author(s):  
Rumana Rashid ◽  
Sk. Sharafat Hossen
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Export Performance ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
The Impact

This study investigates the impact of Foreign Direct Investment (FDI) on economic growth and examines the causality between FDI and economic growth in Bangladesh during 1972-2013. Gross Domestic Product (GDP), export performance (EXP), Foreign Direct Investment (FDI), and Gross Fixed Capital Formation (GFCF) are considered to capture the objective of the study. The study methodology includes some systematic steps. As the data used in the study is time-series in nature, the author employs unit root tests, and in this case, Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests are used. Then Johansen’s cointegration test, Granger causality test, regression with Newey-West Standard Error and Vector Error Correction Model (VECM) are applied. By using the ADF and PP test the study reveals that the variables of four-time series are integrated of I (1) i.e. they are stationary at first difference. Regression analysis result demonstrates that FDI has a positive effect on economic growth. The Granger Causality test discloses that there is a unidirectional relationship between FDI and economic growth. But the VECM estimation finds that in the long run FDI negatively affects economic growth.

scholarly journals Exploring the linkages of Foreign Direct Investment in Spain since 1970’s: an ARDL approach

2020 ◽  
Vol 33 (1) ◽  
pp. 39-54
Author(s):  
Verónica Cañal Fernández ◽  
Julio Tascón Fernández ◽  
María Gómez Martín
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Time Series Data ◽  
Series Data ◽  
Bounds Testing ◽  
Causality Test ◽  
Long Run ◽  
The Relationship

This paper analyzes the relationship between foreign direct investment (FDI), exports and economic growth in Spain using annual time series data for the period 1970 to 2016. To examine these linkages the autoregressive distributed lag (ARDL) bounds testing approach to cointegration for the long-run is applied. The results confirm a long-run relationship among the examined variables. The Granger causality test indicates a strong unidirectional causality between FDI and exports with direction from FDI to exports. Besides, the results for the relationship between FDI and economic growth are interesting and indicate that there is no significant Granger causality from FDI to economic growth and vice-versa.

scholarly journals Foreign Direct Investment, Exports, and Long-Run Economic Growth in Asia: Panel Cointegration and Causality Analysis

2015 ◽  
Vol 8 (1) ◽  
pp. 26 ◽  
Author(s):  
Seng Sothan
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Causality Analysis ◽  
Granger Causality Analysis ◽  
Long Run ◽  
Panel Granger Causality ◽  
Causal Impact

This paper examines the co-movement and causal impact of foreign direct investment (FDI) and exports on economic growth in 21 Asian countries over the period 1980 to 2013, using the panel cointegration and Granger causality analysis. Findings strongly confirm that there is a long-run steady-state relationship between FDI, exports, and GDP for the selected countries. Based on the panel Granger causality analysis, there is long-run bidirectional causality between FDI and GDP and between exports and GDP. This can be concluded that FDI and exports do have causal impact on long-run growth in the countries being investigated.

scholarly journals Foreign Direct Investment and Economic Growth In Indonesia: A Causality Analysis

2019 ◽  
Vol 12 (1) ◽  
Author(s):  
Al Muizzuddin Fazaalloh
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Causal Relationship ◽  
Granger Causality ◽  
Direct Investment ◽  
Causality Analysis ◽  
Fdi Inflows ◽  
Long Run ◽  
Study Analyse ◽  
Causality Relationship

This study analyse the causality relationship between foreign direct investment (FDI) and economic growth in Indonesia over the period 1970-2015. The method used in this research is Granger causality approach. Results from the estimation show that there is no causal relationship between FDI and economic growth in short and long run. However, the results in this paper indicate that there is a unidirectional causal relationship running from economic growth to FDI in short and long run. It means that economic growth influences FDI inflows in Indonesia.

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