This question might look easy for you, but I am kind of new to econometrics and I need your advice.

I am writing a paper where I am researching the relationship of Foreign Direct Investment (FDI) on Gross Domestic Product (GDP). To measure the relationship between FDI and GDP I am thinking to use multiple linear regression, where I would get the significant answer.

But it is not enough for a research paper, so I am planning to investigate from a GDP branch perspective. I have found all the data from every field, like manufacturing, agriculture and etc. branches, which combined is GDP and I would like to investigate each of them.

What method would you suggest to use in order to research the relationship between Foreign Direct Investment and a specific branch of Gross Domestic Product?

Thank you in advance,



Regression can be one of the ways to find relation between GDP and FDI. If you are looking for causation, there is not statistical test. https://www.researchgate.net/post/Any_recommended_techniques_for_testing_causal_relations

Also generally FDI depends on GDP but is it always true ? I think SEM( Structured Equation Modeling) would better find inter-relation between these variables. SEM would also help in identifying relation between different component of GDP.


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