Online published on 27 July, 2017.
Export growth in a country is associated with several factors including foreign direct investment that significantly contribute to faster export promotion. Since 1991, India's new economic policies have fetched more uninterrupted foreign investment than ever before. Within this framework, this paper measures the effect of foreign direct investment inflow over export promotion. Using annual data series 1991–2012, it investigates the effect of foreign direct investment on export growth in India by using co-integration statics. Results support the theory that export increases manyfold in the long run with foreign direct investment. However according to causality test reports, this is a bi-directional relationship, which suggests export and foreign direct investment are variables that mutually motivate one another.
