Foreign Direct Investment and Foreign Trade in India: Toda-Yamamoto Causality Evidence from Selected Trade Partners

Al Barkat Journal of Finance and Management, Vol. 3, No. 2, July 2011, pp.22-33

12 Pages Posted: 2 May 2013

See all articles by Durairaj Kumarasamy

Durairaj Kumarasamy

Consultant, ASEAN India Centre, Research and Information System for Developing Countries

Abstract

The article is a modest attempt to empirically examine the short-run causal nexus between Foreign Direct Investment (FDI) and foreign trade in India with selected trade partners using the Toda-Yamamoto non-Granger Causality approach. This analysis provides mixed results. With the selected trade partners the result observes a short-run causal nexus from export to FDI and FDI to import in India. In brief, the study finds that most of the FDI inflows in India are directed towards domestic market-oriented with the motive of market-seeking in nature.

Keywords: Foreign direct investment, Foreign trade, Granger causality

JEL Classification: F14, F21, F23

Suggested Citation

Kumarasamy, Durairaj, Foreign Direct Investment and Foreign Trade in India: Toda-Yamamoto Causality Evidence from Selected Trade Partners. Al Barkat Journal of Finance and Management, Vol. 3, No. 2, July 2011, pp.22-33, Available at SSRN: https://ssrn.com/abstract=2259240

Durairaj Kumarasamy (Contact Author)

Consultant, ASEAN India Centre, Research and Information System for Developing Countries ( email )

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