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FDI Inflows Influence Merchandise Exports? Causality Analysis for India over 1991-2016

Author

Listed:
  • Debashis Chakraborty

    (Indian Institute of Foreign Trade (IIFT), IIFT Bhawan, B-21, Qutab Institutional Area, New Delhi 110016, India)

  • Jaydeep Mukherjee

    (Indian Institute of Foreign Trade (IIFT), IIFT Bhawan, B-21, Qutab Institutional Area, New Delhi 110016, India)

  • Jaewook Lee

    (Indian Institute of Foreign Trade (IIFT), IIFT Bhawan, B-21, Qutab Institutional Area, New Delhi 110016, India)

Abstract

The deepening waves of globalization since late eighties and the growth in the international integrated production networks (IPN) over the past decade have significantly increased both Foreign Direct Investment (FDI) and merchandise trade flows. India, whose share in global FDI inward stock and global merchandise exports have increased from 0.08 percent to 1.13 percent and 0.51 percent to 1.60 percent over 1989–2015 respectively, is no exception to this trend. The current paper attempts to explain the influence of FDI inflows on India’s exports through a time series analysis with quarterly data over the period 1990–91 (Q1) to 2015–16 (Q4) in the presence of multiple structural breaks. The empirical analysis indicates that while exports influence FDI inflows, the reverse is not true in the Indian context. The result underlines the fact that FDI inflows in the country may primarily be targeting the growing domestic sectors, rather than utilizing the domestic resources for reaching the world market.

Suggested Citation

  • Debashis Chakraborty & Jaydeep Mukherjee & Jaewook Lee, 2017. "FDI Inflows Influence Merchandise Exports? Causality Analysis for India over 1991-2016," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 17(3), pages 1-10, September.
    • Handle: RePEc:wsi:gejxxx:v:17:y:2017:i:03:n:gej-2017-0020
    DOI: 10.1142/GEJ-2017-0020
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    Citations

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    Cited by:

    1. Rishika Nayyar & Jaydeep Mukherjee, 2018. "Outward FDI from India: A macro level examination in the presence of structural breaks," Working Papers 1833, Indian Institute of Foreign Trade.
    2. Raghuvir Kelkar & Kaliappa Kalirajan, 2020. "Has India achieved its potential efficiency in merchandise exports?," ASARC Working Papers 2020-09, The Australian National University, Australia South Asia Research Centre.
    3. Roseline Misati & Kethi Ngoka, 2021. "Constraints on the performance and competitiveness of Tanzania's manufacturing exports," WIDER Working Paper Series wp-2021-35, World Institute for Development Economic Research (UNU-WIDER).
    4. Nayyar, Rishika & Mukherjee, Jaydeep, 2020. "Home country impact on Outward FDI from India," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 385-400.
    5. Van Ha & Mark J. Holmes & Gazi Hassan, 2020. "Does foreign investment benefit the exporting activities of Vietnamese firms?," The World Economy, Wiley Blackwell, vol. 43(6), pages 1619-1646, June.
    6. Radovan Kastratović, 2020. "The impact of foreign direct investment on host country exports: A meta‐analysis," The World Economy, Wiley Blackwell, vol. 43(12), pages 3142-3183, December.

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