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Does FDI Really Matter to Economic Growth in India?

Author

Listed:
  • Yoon Jung Choi

    (Global Strategy Research Center, Korea Trade-Investment Promotion Agency, Seoul 06792, Korea)

  • Jungho Baek

    (Department of Economics, University of Alaska Fairbanks, Fairbanks, AK 99775, USA)

Abstract

The main contribution of this article is to examine the productivity spillover effects from India’s inward foreign direct investment (FDI), controlling for trade, in the framework of the cointegrated vector autoregression (CVAR). For this purpose, using the Solow residual approach the aggregate total factor productivity (TFP) in India is estimated to measure FDI-induced spillovers. The results show that the inflow of FDI to India indeed improves TFP growth through positive spillover effects. We also find that trade appears to have a detrimental effect on TFP growth in India.

Suggested Citation

  • Yoon Jung Choi & Jungho Baek, 2017. "Does FDI Really Matter to Economic Growth in India?," Economies, MDPI, vol. 5(2), pages 1-9, June.
    • Handle: RePEc:gam:jecomi:v:5:y:2017:i:2:p:20-:d:101219
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    References listed on IDEAS

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    4. Nadar, Anand, 2021. "Impact of FDI on GDP per capita in India using Granger causality," MPRA Paper 106826, University Library of Munich, Germany.
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    8. Madhabendra Sinha & Partha Pratim Sengupta, 2022. "FDI Inflow, ICT Expansion and Economic Growth: An Empirical Study on Asia-Pacific Developing Countries," Global Business Review, International Management Institute, vol. 23(3), pages 804-821, June.

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