Page 54 - 2022 Abstract Book RUICHSS_2022_11_17 after conference

University of Ruhuna ISSN: 2706-0063
Matara, Sri Lanka

The Nexus of FDI and Economic Growth; Evidence from
SAARC Countries

Madhurshi Thiyagarajah, Deshan Polkotuwa, Shenali Nupehewa*, Sachintha
Liyanage, Ruwan Jayathilaka, Anuja Lokeshwara
SLIIT Business School, Sri Lanka Institute of Information Technology.
nshenali98@gmail.com

Foreign Direct Investment (FDI) is a major contributor to a nation’s economic
growth, and to better observe the relationship between FDI and the economic growth
in South Asian Association of Regional Cooperation (SAARC) countries, the present
study used a panel data analysis for the 2010-2020 period, by considering FDI net
inflows and Gross Domestic Product (GDP) per capita as variables. The findings of
the panel Granger causality revealed that there was a non- directional causal relation
between FDI and GDP in the eight (8) SAARC countries, and based on the findings,
the study recommends emphasis on flexible trade policies to attract more FDI into
SAARC countries as well as to enhance inflows of resources such as aid and FDI
from the developed world to achieve a higher economic growth.

Keywords: Economic Growth, Foreign Direct Investments, SAARC Countries

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