IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

An Empirical Analysis of the Impact of Foreign Direct Investment on Economic Activity of India

  • R. Jayaraj
  • Sumeet Gupta
Registered author(s):

    FDI in India has - in a lot of ways - enabled India to achieve a certain degree of financial stability, growth and development. This money has allowed India to focus on the areas that may have needed economic attention, and address the various problems that continue to challenge the country. India launched a series of progressive economic liberalization policies to overcome the structural defects that has caused the economic crisis in 1991. With these policy changes, foreign direct investment (FDI) into India has increased rapidly since 1992. Foreign direct investment to India increased from a mere $97 million in 1990-91 to $5,526 million in 2004-05 because of institutional restructuring. The study indicates the co-movement and converging behaviour between the two the movement of FDI and GDP. FDI is not closely following the GDP in the initial period but after the year of 1992 it closely converges with movement in the FDI. The FDI inflows attained its peak in the mid of 2007 and the GDP also responded quickly to it and attained its all time hike. The results shows that FDI did not Granger cause GDP but interestingly GDP has Granger cause on FDI. This result shows the inter-relationship between these two variables. An increased domestic economic activity will attract foreign investors to invest in India. Because of the huge population, increased domestic production in various industries, infrastructural facilities, large domestic market would attract foreign investors.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.rcssindia.org/jge
    Download Restriction: Only to subscribers

    File URL: http://www.rcssindia.org/jge
    Download Restriction: Not freely downloadable

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Research Centre for Social Sciences,Mumbai, India in its journal Journal of Global Economy.

    Volume (Year): 7 (2011)
    Issue (Month): 2 (June)
    Pages: 100-120

    as
    in new window

    Handle: RePEc:jge:journl:722
    Contact details of provider: Web page: http://www.rcssindia.org

    Order Information: Email:


    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:jge:journl:722. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr J K Sachdeva)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.