National Journal of System and Information Technology

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Impact of FDI on Indian External Sector


     

   Subscribe/Renew Journal


An empirical assessment of the Impact of foreign direct investment (FDI) in a host country's external sectors performance is important, since external sector have been for a long time viewed as an engine of economic growth. FDI promotes export and import by facilitating India access to new and larger markets. The present study examines and analyzes the impact of FDI on the Indian external sector between 1970-71 and 2008-09. Ordinary least square (OLS) regressions and the empirical analysis are conducted by using annual data on FDI inflow, Total Export, Total Import and Foreign Exchange Reserve in India over the 1970-71 to 2008-09 periods. There is sufficient evidence to show that there are significant relationship between Indian External sector and foreign direct investment inflows (FDI) in India. FDI has direct positive impact on Export, Import and Foreign Exchange Reserve, which FDI rate increase by 1% will lead to increase by 4.1% in total export with no autocorrelation, while 45% in total import and 61% in foreign exchange reserve with presence of autcorrelation. It is also observed that the impact of FDI on opportunities for domestic business and economic activities is positive and net attitudes of foreign firms toward FDI.

Keywords

FDI Inflows, Export, Import, foreign Exchange Reserve, Regression Analysis
Subscription Login to verify subscription
User
Notifications
Font Size


  • Adil Khan Miankhel, S. M. (2009). Foreign Direct Investment, Export, and Economic Growth in Selected Emerging countries: Multivariate VAR Analysis.

  • Aitken B., H. G. (1997). Spillovers, Foreign Investment and Export Behaviour. Journal of International Economics, 43 , 103-132.

  • Anyamele, O. D. (2010). Foreign Direct Investment, Export, and education on Economic Growth in sub-Saharan African. International Research Journal of Finance and economics , 38-49.

  • Bailey D., N. D. (2007). Industrial Policy, FDI and Employment: Still Missing a Strategy. Published online: 26 Dec 2006 Spring Science + Business Media, LLC .

  • Banga, B. G. (June 2007). Impact of Trade Liberalization on Foreign Direct Investment in Indian Industries. Asia-Pacific Research and Training Network on Trade Working Paper Series, No. 36 .

  • Banga, R. (2003). The Export-Diversifying Impact of Japanese and U.S. Foreign Direct Investments in Indian Manufacturing Sector. Indian Council For Research on International Economic Relations, Working Paper No. 110 .

  • Demekas DG, H. B. (2007). Foreign Direct Investment in European Transition Economics- The Role of Policies. Journal of Comparative Economics, 35 , 369-386.

  • Development, T. a. (1998, 1999, 2004, 2005, 2006). ,United Nations Conference on Trade and Development (UNCTAD). USA.

  • Dunning, J. (1988). The Eclectic Paradigm of International Production: a Restatement and Some Possible Extensions . Journal of International Business Studies, 19(1) , 1-31.

  • Hailu, Z. A. (2010). Impact of Foreign Direct Investment on Trade of African Countries. International Journal of Economics and Finance, Vol. 2, No. 3 , 122-133.

  • Ismail Aktar, L. O. (2008). The Impact of FDI, Export, Economic Growth, Total Fixed Investment on Unemployement in Turkey. 69-76.

  • K. K. (1973). A Macroeconomc Approach to Foreign Direct Investment. Hitotsubashi . Journal of Economics. 14 , 1-21.

  • Nandita Dasgupta (October 2010). Examining the Long Run Effects of Export, Import and FDI Inflows on the FDI Outflows from India: A Causality Analysis. University of Maryland, Baltimore County, USA.

  • Prasanna, N. (2010). Imapct of Foreign Direct Investment on Export Performance in India. J Soc Sci, 24(1) , 65-71.

  • Radulescu, E. P. (2009). The Impact of foreign Direct Investment on The Economic Growth and countries' Export Potential. Romania Journal of Economic Forecasting-4 , 153-169.

  • Song, Z. a. (2000). “Promoting Export, The Role of Inward FDI in China” . China Economic Review 11 , 385-396.

  • Thangavelu, A. J. (n.d.). FDI Activities, Exports and Manufacturing Growth in a Small Open Economy: An Industry-wise Panel Data Analysis.

  • Zhang, K. H. (n.d.). How Does FDI Affect a Host Country's Export Performance?- The Case of China.

  • Trade and Development, United Nations Conference on Trade and Development (UNCTAD), Report 1998, 1999, 2004, 2005, 2006.

  • http://www.iloveindia.com/economy-of-india/foreign-direct-investment.html accessed on 01-11-2010.


Abstract Views: 316

PDF Views: 2




  • Impact of FDI on Indian External Sector

Abstract Views: 316  |  PDF Views: 2

Authors

Abstract


An empirical assessment of the Impact of foreign direct investment (FDI) in a host country's external sectors performance is important, since external sector have been for a long time viewed as an engine of economic growth. FDI promotes export and import by facilitating India access to new and larger markets. The present study examines and analyzes the impact of FDI on the Indian external sector between 1970-71 and 2008-09. Ordinary least square (OLS) regressions and the empirical analysis are conducted by using annual data on FDI inflow, Total Export, Total Import and Foreign Exchange Reserve in India over the 1970-71 to 2008-09 periods. There is sufficient evidence to show that there are significant relationship between Indian External sector and foreign direct investment inflows (FDI) in India. FDI has direct positive impact on Export, Import and Foreign Exchange Reserve, which FDI rate increase by 1% will lead to increase by 4.1% in total export with no autocorrelation, while 45% in total import and 61% in foreign exchange reserve with presence of autcorrelation. It is also observed that the impact of FDI on opportunities for domestic business and economic activities is positive and net attitudes of foreign firms toward FDI.

Keywords


FDI Inflows, Export, Import, foreign Exchange Reserve, Regression Analysis

References