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Do fdi and public investment crowd in or crowd out private domestic investment in India

Author

Listed:
  • Badri Narayan Rath
  • Debi Prasad Bal

    (Indian Institute of Technology-Hyderabad, India)

Abstract

This paper examines the dynamic relationship between Private Domestic Investment (PDI), Foreign Direct Investment (FDI) and Public Investment (PU) in India for the period 1978-79 to 2009-10. Zivot and Andrews test has been used to know the structural break points in the data series. The empirical results derived from structural VAR model indicate that FDI has crowding in effects on PDI, whereas, PU neither Ôcrowd outÕ nor Ôcrowd inÕ PDI. Further, we found the evidence that shocks in PU and PDI have positively improved the FDI inflows in India.

Suggested Citation

  • Badri Narayan Rath & Debi Prasad Bal, 2014. "Do fdi and public investment crowd in or crowd out private domestic investment in India," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(3), pages 269-284, July-Sept.
    • Handle: RePEc:jda:journl:vol.48:year:2014:issue3:pp:269-284
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    Citations

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    Cited by:

    1. Askandarou Diallo, & Jacolin Luc, & Isabelle Rabaud., 2021. "Foreign Direct Investment and Domestic Private Investment in Sub-Saharan African Countries: Crowding-In or Out ?," Working papers 816, Banque de France.
    2. Lv, Ping & Curran, Louise & Spigarelli, Francesca & Barbieri, Elisa, 2021. "One country, many industries: Heterogeneity of Chinese OFDI motivations at meso level," China Economic Review, Elsevier, vol. 69(C).
    3. P.V. Viswanath, 2021. "Connectivity and Savings Propensity among Odisha Tribals," Sustainability, MDPI, vol. 13(2), pages 1-15, January.
    4. Ha, Van & Holmes, Mark J. & Tran, Tuyen Quang, 2022. "Does foreign investment crowd in domestic investment? Evidence from Vietnam," International Economics, Elsevier, vol. 171(C), pages 18-29.
    5. Abraham Babu, 2021. "Foreign Direct Investment - Domestic Investment Nexus: Evidence from India," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 15(3), September.

    More about this item

    Keywords

    Investment; Crowding Out; Crowding in; Structural VAR; Zivot and Andrews Unit Root; India;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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