Interdependence of FDI between India and ASEAN- 5: Evidence from Causality

Abstract

The paper explores the interdependence of FDI between India and ASEAN-5 countries namely, Indonesia, Malaysia, Philippines, Singapore and Thailand, at the individual and group level. The empirical analysis is based on time series cointegration and causality test over the period 1970-2008. The findings suggest the presence of interdependence of FDI between India and ASEAN-5 countries. The policy implication of this study is that with the increasing interest of economic integration around the globe, especially with India-ASEAN Regional Trade and Investment Area (RTIA), the existence of interdependence of FDI between member countries is an important feature for maintaining growth sustainability in the Asian economy.