Research Paper on Economic Growth and Foreign Direct Investment

Foreign Direct Investment and Economic Growth in PNG.pdf

This paper uses cointegration techniques to establish whether there

is any long run relationship between foreign direct investment inflows and gross domestic product in Papua New Guinea. The paper also tests for Granger Causality between the two variables. The results show that there is a long run relationship and evidence of bi-causality between foreign direct investment inflows and gross domestic product growth. In the medium term, growth in foreign direct investment ‘Granger causes’ growth in gross domestic product. Between four and five years after the FDI inflow there is strong evidence of reverse causality.

Abstract