Linear and Non-Linear Granger Casuality Between Foreign Direct Investment and Economic Growth: Evidence From India

Abstract

The present study tries to understand the association among Foreign Direct Investment (FDI) and Economic growth in India. This paper applies the causality test of Granger (1969) based on the VECM and non-linear causality test of Dike and Panchenko over the period 1993-2016. This study gives a proof about the continuation of a long-run equilibrium association between FDI and Gross Domestic Product (GDP) or Economic Growth for the period being investigated. Unidirectional causality runs from FDI to GDP in the long run. The apparent non-linear causality running from FDI to GDP means that FDI is a policy instrument in stimulating Indian economic growth and provides support for the bi-directional non-linear causal connection between FDI and economic growth with 1, 2 and 4 lags. There has been no definitive investigation as of recently to

Analisis Kausalitas Antara Penanaman Modal Asing (PMA) Dan Pertumbuhan Ekonomi Di Provinsi Maluku

“…Penelitian disejumlah daerah di Indonesia dilakukan oleh Amin (2013;Jamaliah (2018); Haq, Nasrul dan Imamudin (2018), sedangkan untuk kasus Indonesia dilakukan oleh Batubara, (2018); Kambono & Marpaung (2020) dan Matondang (2020). Di India dilakukan oleh Hamid & Jena (2020)…”

Is Democracy Necessary for Foreign Direct Investment Inflows in India?

“…Dictators with a vast-time planning horizon can protect property rights. In this way, property protection rights are positively connected with FDI inflows; stable autocracies are anticipated to win higher levels of FDI (Adeleke, 2014; Hamid & Jena, 2020; Olson et al, 2000; Sobhan, 2003). Democracies may receive less FDI than autocracies due to the following reasons.…”

“…According to Huang and Wei (2006) absence of good institutional quality reflected in corruption by government workers and significant degrees of extortions may produce an environment of mistrust and hence be unfortunate for the business community, both foreign and domestic. Thus, poor quality of institutions may prompt unnecessarily high costs in doing business in a highly corrupt economy (Hamid et al, 2020). Weak property rights and, in this manner, increased risks of expropriation may debilitate investors to patent their items to nearby ventures.…”

Effect of Foreign Direct Investment (FDI) on economic growth and labor absorption in Maluku

“…Studies of the effect of investment on economic growth in several regions show a positive and significant effect (Purba, 2020;Amin 2013;Jamaliah 2018;Haq, Nasrul and Imamudin 2018), while in the case of Indonesia it was carried out by Batubara, (2018); Kambono & Marpaung (2020) and Matondang (2020). In India, it was conducted by Hamid & Jena (2020) and Nadar (2021).…”