FOREIGN DIRECT INVESTMENT, TRADE AND ECONOMIC GROWTH: A COMPARISON OF SELECTED SOUTH ASIAN COUNTRIES

Abstract

The present study estimates link among Foreign Direct Investment (FDI), Trade and Economic Growth in four South Asian economies namely, India, Bangladesh, Sri Lanka and Pakistan using data from 1973 to 2010. The study employs Generalized Method of Moments (GMM). Results indicate that FDI has mixed impacts on output expansion in different countries, while Exports have positive impact upon output growth in all countries. Domestic Investment (DI) and Labor force (LF) have also positive impact upon Growth. Sum of both of the coefficients is less than one which exhibits decreasing returns to scale in all the countries.

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