China’s exports and foreign direct investment

• P R Bhat ^[1]
  1. [1] Northern University of Malaysia

     Northern University of Malaysia

     Malasia

     
• Localización: Applied econometrics and international development, ISSN 1578-4487, Vol. 13, Nº. 2, 2013, págs. 190-200
• Idioma: inglés
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• Resumen

  • The objectives of the paper are to study foreign direct investment dimensions of China and to study causal relationship between exports, FDI and GDP. Vector autoregression model (VAR) is adopted to estimate the long run causal relationship among exports, foreign direct investment and GDP. The cointegration test result shows that there exist a long run equilibrium relationship among exports, FDI and GDP. In the estimated error correction model, FDI is a significant variable and the result indicates that 1% change of increase in FDI will lead to 0.04% change of increase in exports with one year time gap. Granger Causality test indicates that there is a unilateral relationship between exports and FDI and the direction is from FDI to exports which mean that FDI causes exports.