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By | Jan. 2013
Page 1 of 13
| 2012|
| Gaurav Jain: Roll no. 20Hemant Agarwal:Roll no. 104Sanjam Sidana: Roll no. 47|

Foreign Direct Investment, Exports, and Economic Growth in Selected Emerging Countries: Multivariate VAR Analysis| |

Table of Contents
Abstract3
Introduction4
Historical Background5
Literature Review7
Data14
Methodology14
Conclusion15
References16

Abstract

This study adopts a time series framework of the Vector Error Correction Models (VECM) to study the dynamic relationship between export, FDI and GDP for six countries namely Chile, India, Mexico, Malaysia, Pakistan and Thailand. Relevant Studies that have been conducted in the past have been reviewed as a part of this study and the literature review corresponding to each study is a part of this report. The six countries are so chosen because given that these countries are at different stages of growth, we will be able to identify the impact of FDI and export on economic growth at different stages of growth. Data pertaining to the exports, annual GDP and annual FDI for each of these countries for the last 15 years has been used for the analysis. The tools used for analysis are as follows:

1. Dickey Fuller Test
2. Phillips–Perron test
3. Vector Error Correction Model

Introduction

In an open economy, technology and knowledge may also be transferred through exports and imports, and thus promote economic growth. However, growth also has effects on trade. In the development literature, this is known as the relation between trade regime/outward orientation and growth. The topic of exports-growth nexus has been a subject of extensive debate since long. Studies have found surprisingly that there is no obvious agreement to whether the causality dictates export-led-growth or growth-led-exports, although the early cross-section studies favour the former. Most of the studies find positive effects of FDI on transitional and long-run economic growth...
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