CEU Electronic Theses and Dissertations, 2023
| Author | Saket, Saket |
|---|---|
| Title | The Relationship between Foreign Direct Investment and Exports in India: An Empirical Study |
| Summary | This thesis aims to comprehensively investigate the multifaceted impact of Foreign Direct Investments (FDI) on exports in India, specific to certain sectors that acquire the most stock of FDI. Through the utilization of panel Auto Regressive Distributed Lag model and an extensive but unbalanced panel of data from multiple sectors spanning from 2000-2021, this study investigates the relationship between FDI and exports, while taking into account various controls. The short run and long run relationship between FDI and exports are analysed using 3 different estimation methods, which lead to interesting and significant results. GDP is found to have no short run significant effect on exports, thus motivating us to investigate how the other controls react in short term when you remove GDP out of the model. The relationship between FDI and exports is found statistically significant and positive in the DFE estimator, and the existence of a long run relationship was established. However, in the long run, the significant effect tends to diminish suggesting the presence of other factors that affect export performance over time. Furthermore, it uncovers substantial heterogeneity in the impact of FDI on different industries, with some sectors depicting a strong relationship between FDI and exports while others don’t. This promotes the importance of implementing different policies for different industries so that they can all benefit in the best way possible. Overall, this thesis provides some insight into the complex relationship between FDI and exports within each sector in India, provoking more thought into the importance of industry composition and tailor-made policies enabling best suit outcomes for each. The findings provide a more updated literature on this relationship in the Indian context, while also looking into the sector specific dynamics, which give room for practical implications for not only policy makers but also for aspiring entrepreneurs and companies. |
| Supervisor | Soomin Lee |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2023/saket_saket.pdf |
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