This study aims to empirically investigate the short-term and long-term effects of healthcare expenditure, institutional quality and domestic and foreign investments on the economic growth of South Asian countries during the period 1996–2018. The pooled ordinary least squares (OLS) and random effects models, Johansen–Fisher cointegration test and Granger causality test have been employed to assess the short-term and long-term relationships and the direction of causality among the variables. The cointegration tests indicate the existence of a long-term equilibrium among the variables. The results reveal that there runs a bidirectional causality from health expenditure to economic growth in the concerned countries in the short run. Further, institutional quality is seen to have a unidirectional effect on health expenditure. Therefore, the authorities of the South Asian nations are required to strengthen the accessibility to and affordability and accountability of the healthcare services being provided to their population.

PurposeThis paper empirically examines the relationship between foreign direct investment, financial development and other macroeconomic variables like trade openness, domestic investment and labour force and that of GDP per capita in select South Asian countries, i.e. India, Sri Lanka and Pakistan for the period 1990–2018.Design/methodology/approachThe study uses various econometrics tools such as Pedroni, Kao and Johansen–Fisher panel cointegration test, Panel FMOLS and DOLS and Granger causality in order to analyse the long-run and short-run dynamics among the variables under consideration.FindingsThe results of the panel data estimation techniques employed imply that there is a short-run causality running from GDP per capita to FDI and financial development, and results from FMOLS and DOLS indicate that FDI and financial development have positive impacts on GDP per capita in the countries under consideration.Originality/valueIn this paper, we use a dynamic macroeconomic modelling framework to examine the effect of FDI and financial development on per capita income in three major south Asian economies, which are categorized as three Non-Least Developed Contracting States under the South Asian Free Trade Area (SAFTA), 2006, established with an aim to facilitate free trade among them. Considering the diversity of the level of growth experienced by these economies, the study uses appropriate panel regression techniques. Therefore, in addition to proper formulation of policies directed towards scaling up of export and import levels, the respective authorities should also take care that the political stability and institutional quality are maintained.

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.

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