The motivation behind this empirical investigation comes from the inconclusive evidence produced by a flurry of previous empirical studies on foreign direct investment (FDI)-growth nexus. The study recognises the fact that the treatment of FDI inflows in an aggregate form instead of a sector-specific approach while correlating it with economic growth remains the most tenuous assumption of the previously conducted studies. Driven by the impetus of filling this gap, this study applies a time-varying parameter model with vector autoregressive specification to examine as to how sector-wise FDI inflows can affect the growth of respective sectors in the context of an emerging economy like India. The study uses a number of econometric tests, such as Johansen’s cointegration test, vector error correction model, Granger causality test, variance decomposition analysis and impulse response analysis, to arrive at robust results. The study evidences the inward FDI to be non-contributive to the agricultural output growth. However, a reverse causality is evidenced wherein agricultural output is found to be attracting more FDI into the sector. It also documents interesting evidence for manufacturing sector where the FDI inflow is found to affect its output positively for a couple of years. Regarding service sector, the study confirms a bidirectional causality between FDI and growth both for the short and long run. On the basis of the findings, the study suggests economic policymakers to rejuvenate the primary sector of India so that it can attract and absorb more FDI and ensure sustainable economic growth. Besides, the agriculture-led economic growth policy might be more reliant than service which is largely vulnerable to external shocks.

The World Development Report (World Bank 1987) outlines a crucial observation, that is, while average annual economic growth rate of the Four Asian Tigers, namely Hong Kong, Singapore, South Korea and Taiwan, adopting export-led growth strategy was at 9.5% during the period of 1963-1973, it was only 4.1% in the countries which followed the import-substitution industrialization (ISI) strategy. With the same ISI strategy, India has also witnessed an average economic growth of only around 3.5% (famously known as the Hindu growth rate) during the 1950s to 1980s. In fact, at the time, the approach to solve economic crises like low growth rate, huge Current Account Deficit (CAD) was still inward. Besides, all the efforts undertaken to solve this were through India's own 'resources and ingenuity' (Economic Survey 1991-1992). Of late, the country's policymakers begun to realize the impact of adopting free-market and outwardoriented trade policies considering the remarkable growth attained by the East Asian tigers who became independent concurrently with India. Witnessing the economic success achieved by the East Asian tigers, the neo-classical economists also begun to rely

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Driven by the need of an economic model that can explain the foreign direct investment (FDI)–export relationship, especially in post-liberalized context, we make a special inquiry on whether FDI has a significant export-promoting impact in India under a time-varying parameter model with vector autoregressive specification. The Johansen’s co-integration test suggests a significant and positive long-run co-movement between FDI and export. The vector error correction model (VECM) confirms a unidirectional long-run causality from export to FDI. However, the Granger causality test establishes a bi-directional causal relationship between these variables in short run. Further, the foreign trade (FT) is found to be a strongly exogenous variable as per the variance decomposition analysis. Again, the impulse response function analysis suggests that the responses generated from a positive shock of FT to FDI and vice versa are small and initially negative, afterward remain steadily positive at a constant level. The study finally recommends the policymakers to channelize the inward-FDI into tradable goods industries rather than only linking it to service sector growth to reap the long-term benefit. In this regard, China’s effort to channelize inward-FDI into manufacturing sectors and the resultant momentous success in export performance can be taken as a classic example for FDI-led foreign trade promotion.

Purpose This study aims to establish the dynamic relationship between international crude oil prices and Indian stock prices represented by the Bombay Stock Exchange (BSE) energy index. Design/methodology/approach Using Johansen’s cointegration test, vector error correction (VEC) model, impulse response function and variance decomposition test the study tries to ascertain the short-term and long-term dynamic association between the oil price shock and the movement of stock price and Granger causality test is applied to find out the nature of causality. Findings Considering vector autoregression estimation, the present study analyzes the relationship between the variables and tries to make a valid conclusion. The result of the co-integration test exhibits the presence of a long-term association between these two macro-economic variables during the period under study. Also, in the short-run VEC Granger causality result reveals that the movement of international crude oil price significantly influences the Indian stock price. Research limitations/implications To get a more robust result the study can be further extended by taking a longer time period with data of shorter time-frequency such as daily or weekly and further by using more sophisticated econometric and statistical tools. Further, the study can be extended to firm-level investigation considering the forward trading concentration with the Indian oil basket. Social implications In today’s globalized era, forecasting of share price movement helps investors in predicting the market and invest accordingly. Through this liquidity of the markets enhance and markets become more active in the global arena. Originality/value This study represents fresh findings in the changing time period the linkage between crude oil prices and stock prices which are of value to the academicians, researchers, policymakers, investors, market regulators, etc.