Economic Impact of Foreign Direct Investment in Sri Lanka
Statistics Department of the Central Bank of Sri Lanka, LK
Mr. B.H.P.K. Thilakaweera is a Senior Assistant Director attached to the Statistics Department of the Central Bank of Sri Lanka. He received a B.Sc. Honours Degree in Statistics and an MA Degree in Financial Economics from the University of Colombo and an M.Sc. in International Economics and Finance from the University of Queensland, Australia. His research interests are mainly in the areas of economic growth and econometric modeling.
This paper investigates the long-run relationship and causality between real per capita GDP, foreign direct investment (FDI) and the level of the infrastructure in Sri Lanka over the period 1980 to 2011. Level of the infrastructure has been measured by using a summary measure based on principal component analysis. Analysis shows that there is a long-run relationship between real per capita GDP, foreign direct investment (FDI) and the level of the infrastructure. The empirical results further confirm the unidirectional causality from level of the infrastructure to FDI.