Does FDI Really Matter to Economic Growth in India?

Baek, Jungho

doi:10.3390/economies5020020

Cited by 37 publications

(36 citation statements)

References 35 publications

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“…This is, however, contrary to the conventional belief that exports increase productivity through learning by doing and/or exporting hypothesis. With regard to the negative impact of exports on TFP growth, our results lend support for the studies of Behera and Yadav (2019), Choi and Baek (2017), , Kim and Lin (2009), and Trejos and Barboza (2015). These studies provide a number of channels through which exports affect TFP negatively.…”

Section: Analysis Of the Long-run And Short-run Relationshipsupporting

confidence: 79%

“…The studies by Kim and Lin (2009) and Trejos and Barboza (2015) found that the impact of exports on productivity is conditional on the level of economic development, with trade having a positive effect on productivity across the developed countries, but it can have a negative impact across developing countries. On the other hand, Choi and Baek (2017) argued that Indian exports are dominated by primary industries such as unrefined (15% of total exports), gems and jewellery (13%), agricultural products (10%), cotton (10%) and cotton-based ready-made garments and accessories (6%). Such a composition of exports exerts a negative impact on TFP, which is primarily driven by technological change.…”

Section: Analysis Of the Long-run And Short-run Relationshipmentioning

confidence: 99%

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Econometric Analysis of Total Factor Productivity in India

Malik

Masood

Sheikh

2021

The Indian Economic Journal

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This article attempts to investigate the potential relationship and significance of various determinants of Total Factor Productivity (TFP) in India for the 1980–2016 time period. Specifically, this is achieved in two stages. In the first, the standard growth accounting approach is used to measure the changes in TFP. Then, the main model for establishing the determinants of TFP growth is estimated using the autoregressive distributed lag (ARDL) model. Our results suggest that inflation and financial development have a statistically positive impact on TFP. Foreign direct investment, imports, and capital formation are found to have a positive but insignificant impact on the TFP. On the other hand, exports, government size, and natural calamities have a statistically negative impact on TFP. Therefore, in order to accelerate the TFP, governments and policymakers need to design and implement policies to increase financial access to the private sector, while maintaining price stability; exports of high-value products; and increased economic integration in the global economy to benefit from foreign investment flows, which brings in new technology.

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Section: Analysis Of the Long-run And Short-run Relationshipsupporting

confidence: 79%

Section: Analysis Of the Long-run And Short-run Relationshipmentioning

confidence: 99%

Econometric Analysis of Total Factor Productivity in India

Malik

Masood

Sheikh

2021

The Indian Economic Journal

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“…Because FDI and trade are two important components of economic growth in Bangladesh, it is important to frame policies that promote growth and reduce the barriers for capital flows. Choi and Baek (2017) reported that FDI inflows lead to improve TFP growth in India through positive spillover effects. Using the ARDL technique, Ridzuan et al (2017) found that FDI inflows play an important role in increasing economic growth in Singapore over the period 1970-2013. In the other side, the relationship between domestic investment and economic growth has been reported by many empirical studies.…”

Section: Introductionmentioning

confidence: 99%

The Impacts of Domestic and Foreign Direct Investments on Economic Growth in Saudi Arabia

Belloumi

Alshehry

2018

Economies

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This paper investigates the causal links between domestic capital investment, foreign direct investment (FDI), and economic growth in Saudi Arabia over the period 1970-2015 by using the autoregressive distributed lag (ARDL) bounds testing to cointegration approach. The fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS), and the canonical cointegrating regression (CCR) are employed to check the robustness of the ARDL long run estimates. The results show that in the long term there are negative bidirectional causality between non-oil GDP growth and FDI, negative bidirectional causality between non-oil GDP growth and domestic capital investment, and bidirectional causality between FDI and domestic capital investment. FDI affects negatively domestic capital investment in the short run, whereas domestic capital investment affects negatively FDI in the long run. Both finance development and trade openness affect positively non-oil GDP growth, FDI inflows and domestic capital investment in the long run. The findings are important for Saudi policy makers to undertake the effective policies that can promote and lead domestic and foreign investments to enhance economic growth in the country.

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“…However, using the Granger causality tests, they find an inconclusive causality between foreign direct investment and economic growth in Botswana. Finally, Choi and Baek (2017) examine the productivity spill-over effects from inward foreign direct investment by controlling for trade, in the framework of the co-integrated vector auto-regression (CVAR) based on Solow residual approach of the aggregate total factor productivity in India. The results show that the inflow of FDI to India indeed improves total factor productivity growth through positive spill-over effects.…”

Section: Review Of Selected Literaturementioning

confidence: 99%

The Causality between Foreign Direct Investment and Economic Growth in Botswana: A Multivariate Analysis

Owusu¹

2019

JETMM

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The paper empirically investigates the short and long-run causal relationship between foreign direct investment, credit to the private sector, trade openness, gross national expenditure and economic growth in Botswana. In doing this, the paper employs multivariate Granger-Causality within an ARDL-bounds approach to co-integration and unrestricted error correction model (UECM). The paper finds that FDI inflow does not spur economic growth but rather, it is economic growth which promotes FDI inflow, credit to the private sector, trade and national expenditure. However, the paper finds a bi-directional relationship between FDI inflow and credit to the private sector both in the short and the long runs. Thus, policies should be targeted at improving the investment climate for existing domestic and foreign investors through infrastructure development and that external capital inflow should be complemented by domestic savings and investors on other to boost economic growth in Botswana.

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Does FDI Really Matter to Economic Growth in India?

Cited by 37 publications

References 35 publications

Econometric Analysis of Total Factor Productivity in India

Econometric Analysis of Total Factor Productivity in India

The Impacts of Domestic and Foreign Direct Investments on Economic Growth in Saudi Arabia

The Causality between Foreign Direct Investment and Economic Growth in Botswana: A Multivariate Analysis

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