The Linear and Nonlinear Relationship between Infrastructure and FDI in India

Abstract

The study examines the linear and nonlinear relationship between Infrastructure and FDI, to understand whether there is a significant difference or not concerning the FDI equity inflows to infrastructure projects. The ARDL and Granger causality methods to cointegration; propose the existence of long-run function in two-directional causalities between foreign direct investment and infrastructure, whereas the nonlinear autoregressive distributed lag (ARDL) validates the asymmetries in the relationship between FDI and Infrastructure. The outcomes of the study are that foreign direct investment inflows are significant to improve the infrastructure projects in various sectors, in the short-run and long run. As enlightening infrastructure is dynamic to attract FDI, outcomes will be predominantly valuable to policymakers and related to the emerging markets.