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A Study on Impact of Foreign Direct Investment on Gross Domestic Production in India

Author

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  • Tamilselvan, M.
  • Manikandan, S.

Abstract

The review of various literatures and renowned publications is emphasizing that the gross domestic production of a nation is determined by several factors such as growth in agriculture and manufacturing sector, export, inflation, exchange rate and international investment. In spite of different factors affecting the growth, the incremental growth of foreign direct investment in various sectors is considered to be a vital factor which controls all other factor. The 1991 new economic policy has unfolded red carpet to the international investors and reduced the uncertainty on the legal and regulatory frame work boosted the investors’ confidence in the economy. As a result, the Indian economy witnessed a vigorous growth since the implementation of Liberalization, Privatization and Globalization (LPG). In this regard this paper is attempting to investigate the contribution of foreign direct investment to the gross domestic production of India. The investigation was made using a simple regression between foreign direct investment (FDI) and gross domestic production (GDP) for 23 years from 1991 – 2014. The result revealed that FDI has as positive impact on GDP.

Suggested Citation

  • Tamilselvan, M. & Manikandan, S., 2015. "A Study on Impact of Foreign Direct Investment on Gross Domestic Production in India," MPRA Paper 73349, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:73349
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    File URL: https://mpra.ub.uni-muenchen.de/73349/1/MPRA_paper_73349.pdf
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    References listed on IDEAS

    as
    1. Khan, Shiraz & Mehboob, Farhan, 2014. "Impact of FDI on GDP: An Analysis of Global Economy on Production Function," MPRA Paper 55352, University Library of Munich, Germany.
    2. Henrik Hansen & John Rand, 2006. "On the Causal Links Between FDI and Growth in Developing Countries," The World Economy, Wiley Blackwell, vol. 29(1), pages 21-41, January.
    3. Dr. Najia Saqib & Maryam Masnoon & Nabeel Rafique, 2013. "Impact of Foreign Direct Investment on Economic Growth of Pakistan," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 3(1), pages 1-3.
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    Cited by:

    1. Hong Zhong Fan & Tatsiana Dziavochka & Mathious Willie & Mirza Nouman Ali, 2019. "The Economic Determinants of Post-Soviet Belarus: The Role of FDI in Economic Development," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(2), pages 56-67, February.

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    More about this item

    Keywords

    FDI; Growth; GDP;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F3 - International Economics - - International Finance

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