Title: Foreign direct investment and economic growth in Bahrain: cointegration and causality tests

Authors: Fuad Kreishan; Mohammad Selim; Ibrahim Alhawarin

Addresses: Department of Economics and Finance, College of Business Administration, University of Bahrain, Bahrain; Al-Hussein Bin Talal University, Ma'an, Jordan ' Department of Economics and Finance, College of Business Administration, University of Bahrain, Sakhir, Bahrain ' Department of Economics, College of Business Administration and Economics, Al-Hussein Bin Talal University, Ma'an, Jordan

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.

Keywords: economic growth; cointegration test; foreign direct investment; FDI; granger causality; Bahrain.

DOI: 10.1504/IJEBR.2018.094378

International Journal of Economics and Business Research, 2018 Vol.16 No.3, pp.395 - 404

Received: 19 Apr 2017
Accepted: 21 Aug 2017
Published online: 31 Aug 2018 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article