IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v11y2023i3p73-d1076555.html
   My bibliography  Save this article

Relationship between FDI Inflows and Export Performance: An Empirical Investigation by Considering Structural Breaks

Author

Listed:
  • Sayed Farrukh Ahmed

    (Department of Business Administration, Faculty of Business and Entrepreneurship, Daffodil International University, Dhaka 1341, Bangladesh)

  • A. K. M. Mohsin

    (Department of Business Administration, Faculty of Business and Entrepreneurship, Daffodil International University, Dhaka 1341, Bangladesh)

  • Syed Far Abid Hossain

    (BRAC Business School, BRAC University, 66, Mohakhali, Dhaka 1212, Bangladesh)

Abstract

The present study examines the relationship between FDI inflows and export performance in Bangladesh by considering the issue of structural breaks utilizing annual time-series data from 1972 to 2019. In the study, unit root tests were conducted without (ADF test and PP test) and with (ZA test and LP test) the presence of probable structural breaks in the dataset. A Johansen test of co-integration was employed to determine whether the variables were co-integrated. The VECM was used for determining the sources of causation and the directions of the causal relationships between the variables. Since all the variables were integrated of order one, I (1), with breaks (confirmed by ZA and LP unit root tests), a Johansen test of co-integration was applied to identify whether the variables were co-integrated. The results of the Johansen co-integration test confirmed that three variables (LRGDPGR, LRFDI, and LREX) have a long-run equilibrium relationship or cointegrating relation. Finally, the VECM suggests the evidence of a positive and unidirectional causal relation from REX to RFDI in Bangladesh. An important uniqueness of this study lies in its application of the methodological issues of incorporating structural breaks, which could have significant implications for investigating the said relationship.

Suggested Citation

  • Sayed Farrukh Ahmed & A. K. M. Mohsin & Syed Far Abid Hossain, 2023. "Relationship between FDI Inflows and Export Performance: An Empirical Investigation by Considering Structural Breaks," Economies, MDPI, vol. 11(3), pages 1-17, February.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:3:p:73-:d:1076555
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/11/3/73/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/11/3/73/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kumar Narayan, Paresh & Singh, Baljeet, 2007. "The electricity consumption and GDP nexus for the Fiji Islands," Energy Economics, Elsevier, vol. 29(6), pages 1141-1150, November.
    2. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    3. Rudy Rahmaddi & Masaru Ichihashi, 2013. "The role of foreign direct investment in Indonesia's manufacturing exports," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(3), pages 329-354, December.
    4. Chakraborty, Debashis & Mukherjee, Jaydeep & Lee, Jaewook, 2016. "Do FDI Inflows influence Merchandise Exports? Causality Analysis on India over 1991-2016," MPRA Paper 74851, University Library of Munich, Germany.
    5. Ali M Kutan & Goran Vukšić, 2007. "Foreign Direct Investment and Export Performance: Empirical Evidence," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(3), pages 430-445, September.
    6. Oh, Wankeun & Lee, Kihoon, 2004. "Causal relationship between energy consumption and GDP revisited: the case of Korea 1970-1999," Energy Economics, Elsevier, vol. 26(1), pages 51-59, January.
    7. Haitham Medhat Abdelaziz Elsayed Aboulilah & Syed Far Abid Hossain & Bui Nhat Vuong & Tawfiq Jebril, 2022. "Exploring the Relationship between WeChat Usage and E-purchase Intention During the COVID-19 Pandemic Among University Students in China," SAGE Open, , vol. 12(4), pages 21582440221, November.
    8. Xin Li & Hsu Ling Chang & Chi Wei Su & Yin Dai, 2017. "Does foreign direct investment promote exports in China?," China Finance Review International, Emerald Group Publishing Limited, vol. 7(2), pages 185-202, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dakpogan, Arnaud & Smit, Eon, 2018. "The effect of electricity losses on GDP in Benin," MPRA Paper 89545, University Library of Munich, Germany.
    2. Paul, Biru Paksha & Uddin, Gazi Salah, 2011. "Energy and output dynamics in Bangladesh," Energy Economics, Elsevier, vol. 33(3), pages 480-487, May.
    3. Chakraborty Debashis & Mukherjee Jaydeep & Lee Jaewook, 2017. "FDI Inflows Influence Merchandise Exports? Causality Analysis for India over 1991-2016 : Causality Analysis for India Over 1991–2016," Global Economy Journal, De Gruyter, vol. 17(3), pages 1-10, September.
    4. Omri, Anis, 2014. "An international literature survey on energy-economic growth nexus: Evidence from country-specific studies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 951-959.
    5. Gerard Bikorimana & Charles Rutikanga & Didier Mwizerwa, 2020. "Linking energy consumption with economic growth: Rwanda as a case study," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2020(2), pages 181-200.
    6. Chakraborty, Debashis & Mukherjee, Jaydeep & Lee, Jaewook, 2016. "Do FDI Inflows influence Merchandise Exports? Causality Analysis on India over 1991-2016," MPRA Paper 74851, University Library of Munich, Germany.
    7. Kanjilal, Kakali & Ghosh, Sajal, 2013. "Environmental Kuznet’s curve for India: Evidence from tests for cointegration with unknown structuralbreaks," Energy Policy, Elsevier, vol. 56(C), pages 509-515.
    8. Zhang, Xing-Ping & Cheng, Xiao-Mei, 2009. "Energy consumption, carbon emissions, and economic growth in China," Ecological Economics, Elsevier, vol. 68(10), pages 2706-2712, August.
    9. Jayanthakumaran, Kankesu & Verma, Reetu & Liu, Ying, 2012. "CO2 emissions, energy consumption, trade and income: A comparative analysis of China and India," Energy Policy, Elsevier, vol. 42(C), pages 450-460.
    10. Muhammad Shahbaz & Mete Feridun, 2012. "Electricity consumption and economic growth empirical evidence from Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 46(5), pages 1583-1599, August.
    11. Zhang, Chi & Zhou, Kaile & Yang, Shanlin & Shao, Zhen, 2017. "On electricity consumption and economic growth in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 353-368.
    12. Parajuli, Ranjan & Østergaard, Poul Alberg & Dalgaard, Tommy & Pokharel, Govind Raj, 2014. "Energy consumption projection of Nepal: An econometric approach," Renewable Energy, Elsevier, vol. 63(C), pages 432-444.
    13. Nasir, Muhammad & Ur Rehman, Faiz, 2011. "Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation," Energy Policy, Elsevier, vol. 39(3), pages 1857-1864, March.
    14. Muhammad, Anees & Ishfaq, Ahmed, 2011. "Industrial development, agricultural growth, urbanization and environmental Kuznets curve in Pakistan," MPRA Paper 33469, University Library of Munich, Germany.
    15. Zachariadis, Theodoros, 2007. "Exploring the relationship between energy use and economic growth with bivariate models: New evidence from G-7 countries," Energy Economics, Elsevier, vol. 29(6), pages 1233-1253, November.
    16. Rahman, Mohammad Mafizur, 2017. "Do population density, economic growth, energy use and exports adversely affect environmental quality in Asian populous countries?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 506-514.
    17. Nektarios A. Michail & Christos S. Savva, 2021. "Electricity consumption and economic activity in Cyprus using an asymmetric cointegration technique," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 15(2), pages 26-41, December.
    18. Alkhathlan, Khalid & Javid, Muhammad, 2013. "Energy consumption, carbon emissions and economic growth in Saudi Arabia: An aggregate and disaggregate analysis," Energy Policy, Elsevier, vol. 62(C), pages 1525-1532.
    19. Shahbaz, Muhammad & Salah Uddin, Gazi & Ur Rehman, Ijaz & Imran, Kashif, 2014. "Industrialization, electricity consumption and CO2 emissions in Bangladesh," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 575-586.
    20. Sofien, Tiba & Omri, Anis, 2016. "Literature survey on the relationships between energy variables, environment and economic growth," MPRA Paper 82555, University Library of Munich, Germany, revised 14 Sep 2016.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:11:y:2023:i:3:p:73-:d:1076555. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.