Foreign Direct Investment and Exports Stimulate Economic Growth? Evidence of Equilibrium Relationship in Peru

The purpose of this research is to estimate the dynamic impacts foreign direct investments (FDI) and exports on economic growth in Peru (1970–2020) using annual series. Starting with theoretical Mundell–Fleming static model assumptions, we find that change does not affect GDP, effect FDI GDP can be positive or negative depending comparison between slopes IS LM curves. variables are investment net flow (% GDP), goods services rate (%). constitute first-order integrated processes; meanwhile, a stationary process. Granger causality evidences feedback FDI-led hypothesis. Considering dependent variable rate, autoregressive distributed lag cointegration bound test shows findings regarding consist long-term equilibrium from GDP. Estimating an error correction model, short-term, explains have insignificant impact Peru. Finally, conclude Peru’s policy path should continue attract capital increase FDI.