Foreign direct investment and economic growth in Bahrain: cointegration and causality tests
by Fuad Kreishan; Mohammad Selim; Ibrahim Alhawarin
International Journal of Economics and Business Research (IJEBR), Vol. 16, No. 3, 2018

Abstract: The principal objective of this study is to investigate empirically the relationship between foreign direct investment (FDI) and gross domestic product (GDP) for Bahrain over the period 1982-2014. For this purpose, the study employed Engle-Granger cointegration and Granger causality tests. The results of cointegration tests clearly indicate a long-run positive relationship between FDI and economic growth in Bahrain. Moreover, the causality tests reveal that the direction of causality runs from FDI to GDP. Thus, the results conclude that attracting FDI into the country will play a vital role in stabilising the economy and achieving long run economic growth goals for Bahrain.

Online publication date: Fri, 31-Aug-2018

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