Impact of Foreign Trade, Fdi, Exchange Rate And Inflation on Economic Growth

Impact of Foreign Trade, Fdi, Exchange Rate And Inflation on Economic Growth

Zhang Yuna

aLimkokwing University of Creative Technology


This study analysed the long run relationship between economic growth, foreign direct investment, foreign trade, inflation, exchange rate, imports and exports for the period of 1980-2011 using annual time series analysis. It examined the dependency of economic growth on foreign trade, exchange rate, inflation and foreign direct investment. Trade openness, foreign direct investment and inflation are found stationary at level while imports, exports, exchange rate and economic growth are stationary at first difference. All the variables have long run relationship according to cointegration results. DOLS results showed that imports and exports have significant positive relationship, inflation and foreign trade have significant negative impact, and exchange rate and foreign direct investment have insignificant positive influence on economic growth. The negative impact of foreign trade can be overcome by producing import substitutes and creating conditions for trade surplus. Other policy reforms are also required to enhance the economic growth.

Keywords: Foreign Direct Investment, Exchange Rate, Foreign Trade, Inflation, DOLS, Cointegration

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How to cite this article:
Zhang Yuna. Impact of Foreign Trade, Fdi, Exchange Rate And Inflation on Economic Growth. Global journal of Economics and Business Administration, 2019, 3:17.


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