Foreign Direct Investment and Exports Nexus: Cointegration and Causality Evidence from Cote d’Ivoire

Abstract

This paper examines the relationship between foreign direct investment (FDI) and exports in Cote d’Ivoire using data covering the period 1970 to 2007. The residuals-based test of Gregory and Hansen (1996) shows that the two variables are cointegrated. The Granger causality tests reveal a long-run causal relationship running from exports to FDI, whereas no short term causal link has been found.

Keywords: Exports; Foreign direct investment; Cointegration; Granger causality