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Does Foreign Direct Investment Lead Economic Growth in India?


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1 Post Graduate Department of Commerce and Management Studies, Sri C AchuthaMenon Government College, Thrissur, Kerala, India
     

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This paper investigates the causal relations between foreign direct investment and economic growth in a developing country like India. The analysis has been made under Johansen's Cointegration framework based on 21 years of data covering the post reform era of the country. The Cointegration analysis finds strong positive relation between FDI and economic growth in India. The study concludes with a suggestion that the policy makers in India should develop investor friendly environment conducive for attracting more amount of capital from the developed world.

Keywords

FDI, Economic Growth, Unit Root, Cointegration
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  • Does Foreign Direct Investment Lead Economic Growth in India?

Abstract Views: 656  |  PDF Views: 4

Authors

T.G Saji
Post Graduate Department of Commerce and Management Studies, Sri C AchuthaMenon Government College, Thrissur, Kerala, India

Abstract


This paper investigates the causal relations between foreign direct investment and economic growth in a developing country like India. The analysis has been made under Johansen's Cointegration framework based on 21 years of data covering the post reform era of the country. The Cointegration analysis finds strong positive relation between FDI and economic growth in India. The study concludes with a suggestion that the policy makers in India should develop investor friendly environment conducive for attracting more amount of capital from the developed world.

Keywords


FDI, Economic Growth, Unit Root, Cointegration

References