Abstract

The paper explores the interdependence of FDI between India and ASEAN-5 countries namely, namely Indonesia, Malaysia, Philippines, Singapore and Thailand, at the individual and group level. The empirical analysis is based on time series cointegration and causality test over the period 1970-2008. The findings suggest the presence of interdependence of FDI between India and ASEAN-5 countries. The policy implication of this study is that with the increasing interest of economic integration around the globe, especially with India-ASEAN Regional Trade and Investment Area (RTIA), the existence of interdependence of FDI between member countries is an important feature for maintaining growth sustainability in the Asian economy.

Keywords: Economic growth, Defense spending, Panel cointegration.

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