Does Inward FDI Lead to Export Performance in India? An Empirical Investigation

Mohanty, Saileja; Sethi, Narayan

doi:10.1177/0972150919832770

Cited by 27 publications

(30 citation statements)

References 49 publications

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“…Domestic determinants such as sound macroeconomic policies, good governance, human capital, political stability and national savings are crucial for economic growth (Narayan, 2004;Romer, 1986;Roubini and Wachtel, 1999;Solow, 1956). However, in recent times, factors outside the domestic economy, namely, exports, remittances, foreign direct investment (FDI) and FIIs have also become key enablers of economic growth (Azman-Saini et al, 2010;Barajas et al, 2009;Chen and Jayaraman, 2016;Mohanty and Sethi, 2019), particularly for the developing countries like those situated in the South Asian region, which are in need of foreign capital as well as foreign technology. The sustainable growth of an economy is fundamental because a healthy, growing economy has a great potential to reduce unemployment and alleviate poverty which is readily needed in the countries in the South Asian region.…”

Section: Introductionmentioning

confidence: 99%

Does inward remittance lead to export performance in South Asian countries?

Jena¹,

Sethi

2019

IJSE

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Purpose The purpose of this paper is to empirically investigate whether inward remittance leads to export performance in selected South Asian economies over the time period of 1993–2017. Design/methodology/approach The stationarity of the variables is checked by Levin, Lin and Chu t, Breitung t-stat., Im, Pesaran and Shin W-stat., ADF–Fisher and Philips–Perron–Fisher panel unit root tests. Panel Granger Causality is used to verify the short-run causality. Pedroni’s, Kao’s and Johansen–Fisher panel cointegration approaches are employed to examine the long-run relationship among the variables. Panel VECM is used to confirm the existence of a long-run relationship among the variables. Findings Panels FMOLS and DOLS show that remittance inflows have negatively impacted the export performance of the selected South Asian countries during the study period. Granger Causality and VECM test confirm the existence of short-run and long-run relationship among the variables. The authors conclude that inward remittance is affecting export performance negatively during the study period. Furthermore, inward remittances occupy a major source of development finance for selected South Asian countries. Originality/value The study uses a dynamic macroeconomic modeling framework to assess the inward remittance on export performance in South Asian countries. Taking into account the diversity of the level of growth experienced by the five countries in the Asian region, the study uses an appropriate regression technique, i.e. panel dynamic OLS whose results are robust. As exports are a proven way to further economic growth, this study fills a vital gap in the literature by ascertaining the degree of impact of remittances in influencing outbound exports from the South Asian region.

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Section: Introductionmentioning

confidence: 99%

Does inward remittance lead to export performance in South Asian countries?

Jena¹,

Sethi

2019

IJSE

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“…The overall crowd-in effect can be explained in the literature. Foreign direct investment is known to promote knowledge, technology transfer, exports expansion, product and process innovation (Djulius, 2017;Jawaid et al, 2016;Jin et al, 2019;Mohanty & Sethi, 2019;Schneider & Wacker, 2020;Viglioni & Calegario, 2020). Whilst employees could share knowledge on the job, labour mobility within the food manufacturing sector (from MNEs to domestic firms), would also lead to knowledge diffusion.…”

Section: Discussion Of Estimationsmentioning

confidence: 99%

Level of development, foreign direct investment and domestic investment in food manufacturing

Djokoto

2021

F1000Res

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Background: Whilst the literature on the complementarity and substitutability of foreign direct investment (FDI) on domestic investment (DI) is not uncommon, the facet of food manufacturing is non-existent. This paper fills this void by investigating the effect of FDI on DI in the food manufacturing sector for developing, economies in transition and developed countries. Methods: Using an unbalanced panel data of 49 countries from 1993 to 2016, from FAOSTAT, estimated by the system generalised method of moments (GMM), the Wald statistics for the short and long-run effects of FDI on DI were computed for the development groups. Results: Developed economies experienced a crowd-out effect of FDI on DI in the short run, whilst the others experienced no significant effect. In the case of the long run, food manufacturing sectors of all three development groups exhibited a crowd-out effect. The effect in the long run for all development groups together is a crowd-in. Analysing all country groups together could mask the results of the various country groups. Conclusions: A review of investment policies to priorities FDI entry mode that favour domestic investment is needed. Improvement of the investment regulatory and administrative efficiency among others are recommended.

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“…The pessimistic school of thought may not rule out completely attracting inward FDI but is of the opinion that it does not in any way improve international trade. Using ARDL technique, Mohanty and Sethi (2019) found that there is a negative and significant impact of FDI on real exports in long term but positive in the short term.…”

Section: Asian Economic and Financial Reviewmentioning

confidence: 99%

Untitled

2020

Asian Economic and Financial Review

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Most of the Nigerian government's transformation agenda is geared toward creating and enabling business environments to attract foreign direct investment. Opinions are divided as to the impact of foreign investment on trade and this researcher believed it could be either positive or negative. Hence, this research is to ascertain the magnitude of foreign investment's impact on Nigeria's bilateral trade. Integrating foreign direct investment in the gravity model, we applied the PPML technique because of its robustness and ability to recognise zero trade. We segregated foreign investment into three-flow, stock and its annual growth. Our estimation revealed that foreign direct investment stock impacts negatively on bilateral trade flow in Nigeria for both exports and imports and it is robust with the overall sample. Exporters' foreign direct investment inflow was also revealed to have an impact on bilateral trade in Nigeria. But in all ramifications the magnitude of the negative impact is relatively small but statistically significant reflecting that trade and inward foreign investment are at least substitutes. Nigeria should further encourage inward foreign investment to further stimulate economic growth and aid in creating import substitution. Contribution/ Originality: This study uses new estimation methodology and the model to determine the impact of foreign direct investment (FDI) on Nigeria's trade development. The impact of FDI was measured from three perspectives; stock, flow and growth. The paper revealed there is a robust and statistically significant negative effect of FDI on trade, though very negligible.

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Does Inward FDI Lead to Export Performance in India? An Empirical Investigation

Cited by 27 publications

References 49 publications

Does inward remittance lead to export performance in South Asian countries?

Does inward remittance lead to export performance in South Asian countries?

Level of development, foreign direct investment and domestic investment in food manufacturing

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