An analysis of trends and determinants of FDI inflows in India
- IASSI Quarterly: Contributions To Indian Social Science
- 40(2), Apr-Jun, 2021: p.267-286
This study is an attempt to identify the key determinants of FDI (foreign direct investment) inflows into India and assess their impact. A multiple regression analysis has been used to for this purpose. A trends and growth analysis has been made, to study the long term growth of FDI inflows during the period of 18 years from 2001-02 to 2018-19. The study finds a significant long-term positive trend in FDI inflows in India. To test the stationarity in time series of independent variables along with the FDI inflows at the level and at their first difference, the Augmented Dickey Fuller (ADF) test has been applied. The results of unit root test indicate that all the time series variables are non-stationary at their level but become stationary at their first difference. The study finds a long run relationship between trade openness and FDI inflows, which suggests that a more liberal FDI policy framework is required to cope with the dynamic global business environment and attract FDI inflows in India. – Reproduced
FDI inflows, Trade openness, Gross fixed capital formation, Stationarity, Augmented dickey fuller (ADF) test