1Assistant Professor, Department of Commerce in Belda College, Paschim Midnapore, West Bengal
2Assistant Professor, Department of Commerce with Farm Management in Vidyasagar University, Midnapore, West Bengal
3UGC Senior Research Fellow, Department of Business Administration, Vidyasagar University, Midnapore, West Bengal
The interrelationship between flow of Foreign Direct Investment (FDI) and the volume of country's export has been a matter of controversy among economists for many decades. This study provides some empirical evidences on the short and long run dynamic relationship between FDI and Export of India for the period of 1996–97 to 2016–17. The result of Johansen's cointegration test suggests that there exist significant positive long-run comovement between the FDI and Export in India. Further, The Vector Error Correction Model and VEC granger causality test confirms a unidirectional long and short run causal relationship between these variables. In both the cases changes in export is found to be positively impacting FDI but the reverse is not found to be true. The study is highly expected to foster some basic understanding on the dynamic relationship between these variables and is targeted offer some practical insights for financial regulators and policy makers in formulating economic policies in India.
Foreign Direct Investment, Export, Cointegration, Vector Error Correction Model, Granger Causality
