Co - Integration Study in Term of Inward FDI (A Case of India and Pakistan)
Journal Title: Scholars Journal of Economics, Business and Management - Year 2016, Vol 3, Issue 7
Abstract
This paper pursued with the objective of investigating short-term dynamics and equilibrium relations between the two countries in south Asia – India and Pakistan. The main focus of the study is on analyzing patterns of inward Foreign Direct Investment (FDI)in Indian sub-continents. The sample involves yearly time series Foreign Direct Investment (FDI) data from 1980 until 2011. The study employs Engle-Granger Co-integration test, Augmented Dickey-Fuller (ADF) test and Error Correction Modeling (ECM). Empirical results show a significant long-term and the short run relationship between India and Pakistan while to consider India inward FDI as a dependent variable. The finding has one clear implication, that there is a bi-directional relationship involving Foreign Direct Investment (FDI) in India and Pakistan. Analysis of dynamic interactions over post-sample period via impulse response functions and variance decomposition suggest that Pakistan does influence the pattern of Foreign Direct Investment (FDI) inflow in India. Keywords:Inward foreign direct investment, Indian subcontinent, EG co-integration test
Authors and Affiliations
TahirIqbal . , Abdul Razak Abdul Hadi, Sehrish Zafar
Keywords
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