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What methodological approaches used by researchers to study the nexus between trade FDI and economic growth? 

Information and Communications Technology
Error correction model
Cointegration
Nexus (standard)
Unit root
Best insight from top research papers

Researchers have employed various methodological approaches to study the relationship between trade, Foreign Direct Investment (FDI), and economic growth. Some studies have utilized autoregressive distributed lag models to analyze long-run associations among these variables . Others have applied the Hatemi J test for non-linear causality analysis to investigate the causal relationship between FDI and economic growth in Regional Comprehensive Economic Partnership (RCEP) countries . Additionally, contemporary time-series procedures involving unit-root tests, cointegration analysis, and Granger causality tests have been utilized to examine the causal nexus between FDI and economic growth in countries like Indonesia . These methodological approaches have contributed significantly to understanding the complex interactions between trade, FDI, and economic growth in different national contexts.

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Open access•Journal Article•DOI
The Causal Nexus Between Foreign Direct Investment and Economic Growth in Indonesia: An Autoregressive Distributed Lag Bounds Testing Approach
03 Jan 2022-Periodica Polytechnica Social and Management Sciences
2 Citations
Researchers used ARDL bounds testing for cointegration, unit-root tests (ADF, PP, KPSS, LS), and Granger causality test to analyze the causal relationship between FDI and economic growth in Indonesia.
Open access•Journal Article•DOI
Nexus between information technology and economic growth: new insights from India
Asif Raihan
01 Jul 2023
Researchers used unit root tests to check data stationarity and employed the autoregressive distributed lag (ARDL) technique to analyze the relationship between ICT, FDI, and GDP in India.
Journal Article•DOI
The causality relationship between foreign direct investment and economic growth in RCEP countries
11 Nov 2022-Journal of Economic and Administrative Sciences
Researchers used the Hatemi J test for asymmetric causality to analyze the relationship between FDI and economic growth in RCEP countries, deviating from standard Granger-linear tests.
Journal Article•DOI
Dynamics between trade openness, FDI and economic growth: evidence from an emerging economy
Bijoy Rakshit
11 Oct 2021-Journal of International Trade Law and Policy
3 Citations
Researchers used autoregressive distributed lag model to analyze long-run associations, Zivot-Andrew unit root test for structural breaks, and Toda-Yamamoto causality approach to determine causality between trade openness, FDI, and economic growth.
Open access•Journal Article•DOI
Revisiting FDI Led Economic Growth Hypothesis in India an Autoregressive Distributed Lag Approach
Shanga Mohammad, Dastgir Alam 
13 Mar 2023-Saudi journal of economics and finance
Researchers utilized an Autoregressive Distributed Lag (ARDL) approach to investigate the relationship between Foreign Direct Investment (FDI) and economic growth in India, confirming a significant impact of FDI.

Related Questions

How does foreign direct investment (FDI) impact the level of trade between countries and contribute to economic growth?5 answersForeign direct investment (FDI) plays a significant role in influencing trade levels and fostering economic growth. FDI leads to enhanced export performance in various OECD economies, facilitating the diffusion of ideas and technologies. In developing countries, FDI has been linked to improving the quality of exports, particularly in sectors prioritized for investment promotion. Additionally, FDI spillovers contribute substantially to productivity gains in U.S. manufacturing firms, with a notable impact on domestic firms' growth between 1987 and 1996. Overall, FDI's influence on trade and economic growth is evident across different regions and sectors, highlighting its importance in driving global economic development.
How does the relationship between trade and FDI impact economic growth?5 answersThe relationship between trade and Foreign Direct Investment (FDI) significantly impacts economic growth. Studies show that international trade and FDI act as crucial channels for technology transfer between countries, leading to economic growth and sustainable development. Trade partisan conflicts can deter FDI inflows and hinder economic activities, emphasizing the need for policies to mitigate these negative impacts. In China, trade openness, FDI, and capital formation positively influence industrial economic growth, supporting the feedback hypothesis and highlighting the role of technological innovation in driving economic development. Furthermore, in India, FDI, technology transfer, and trade liberalization play key roles in employment generation and entrepreneurship, showcasing the interconnectedness of these factors in driving economic growth. Overall, prioritizing growth policies that foster sustainable economic expansion is crucial for driving economic growth and attracting FDI, as seen in the case of China.
How does FDI affect economic growth?5 answersFDI has a positive impact on economic growth. It encourages economic growth by filling the saving-investment gap, transferring advanced technology, and promoting new entrepreneurship. The sectoral composition of FDI also plays a role in its effect on economic growth. FDI in manufacturing has a positive and statistically significant influence on economic growth, while FDI in the tertiary sector has a statistically significant negative effect on economic growth. Different forms of FDI, such as mergers and acquisitions (M&A) and greenfield investment, can have different effects on economic growth depending on the characteristics of the FDI host economy and the investing company. However, there are conflicting findings in the literature, with some studies showing a positive impact of FDI on economic growth and others revealing the opposite result. Overall, FDI can contribute to economic growth by providing capital, know-how, and technology to the host country.
Do local financial markets mediate the relationship between FDI and economic growth in india?5 answersLocal financial markets play a mediating role in the relationship between FDI and economic growth in India. The inflow of FDI has a direct impact on the Indian stock market, as evidenced by the correlation between FDI and both the Sensex and Nifty indices. This suggests that the amount of FDI flowing into India determines the trend of the stock market. Additionally, the results of Granger causality tests indicate that local financial market development is important in catalyzing the flow of FDI. These findings are consistent across different measures of financial market development and are particularly significant in non-OECD, low-income, and lower-middle-income countries. Therefore, it can be concluded that local financial markets in India play a crucial role in mediating the relationship between FDI and economic growth.
Does trade openness lead to economic growth?5 answersTrade openness has been found to have a positive impact on economic growth in various countries and regions. Studies have shown that trade openness can stimulate economic growth through various channels such as technology transfer, export promotion, and efficient resource allocation. However, the relationship between trade openness and economic growth is not linear and depends on factors such as income per capita thresholds. Some studies have also found that the effects of trade openness on economic growth can be asymmetric, with different impacts in the short run and long run. Additionally, the benefits of trade openness may be more pronounced in resource-rich countries, where openness can lead to economic benefits through the export of natural resources. Overall, while there may be divergent views on the effect of trade openness on economic growth, the majority of studies suggest a positive relationship between the two.
FDI-growth nexus in Africa: does governance matter?5 answersThe relationship between FDI and economic growth in Africa is influenced by governance. Weak governance inhibits growth, while positive and increased growth is observed when governance is interacted with FDI. Specifically, control of corruption, political stability, and government effectiveness are important for the impact of FDI on economic growth in Africa. Additionally, the quality of institutions, including regulatory quality and governance composite index, has a positive and significant effect on economic growth. However, there is a negative relationship between FDIs and economic growth in some African countries, partly due to poor governance. To enhance the FDI-growth nexus, African governments must improve their governance structure and create a strong institutional environment.

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