RELATIONSHIP BETWEEN OUTWARD FDI AND EXPORTS: A CAUSALITY ANALYSIS FOR INDIA
The past two decades have seen a rapid increase in outward Foreign Direct Investment (FDI) from developing countries. India, being one of those important developing countries, has also seen surge in the outward FDI flows and it has emerged as an important mode of internationalization by Indian enterprises since 1990s.This paper analyses the trends and patterns in outward FDI from India. Further, it examines the relationship between Outward FDI flows and exports for India Using annual time series data. We test for bidirectional causality between exports and FDI using Granger causality test. The results indicate that while there is no evidence of causality from outward FDI to exports, there is weak causality that runs from exports to outward FDI.
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