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Does Infrastructure Play a Role in Foreign Direct Investment?

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  • Rudra Prakash Pradhan

Abstract

The paper investigates the determinants of Foreign Direct Investment (FDI) in India, with particular reference to infrastructure. Covering the period from 1970 to 2004, the empirical investigation confirmed that infrastructure has a significant negative impact on FDI inflows in India. This is mostly due to stagnant infrastructure investment in the economy. On the contrary, FDI inflows are positively determined by trade openness in the country. The paper suggests that to make our economic policy more effective towards increasing inflows of FDI, a successful FDI policy must be well-integrated with the policy of globalization and infrastructural development.

Suggested Citation

  • Rudra Prakash Pradhan, 2008. "Does Infrastructure Play a Role in Foreign Direct Investment?," The IUP Journal of Financial Economics, IUP Publications, vol. 0(2), pages 48-60, June.
    • Handle: RePEc:icf:icfjfe:v:06:y:2008:i:2:p:48-60
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