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Economic Growth in India: Does Foreign Direct Investment Inflow Matter?


  • Dukhabandhu Sahoo

    (Institute for social and Economic Change)

  • Maathai K Mathiyazhagan


This paper examines the role of Foreign Direct Investment (FDI) in promoting economic growth via export promotion by using quarterly data relating to the period 1991-I to 2000-IV. The study uses the Johansen co-Integration test, and the results demonstrate that there is a long-run relationship between Gross Domestic Product (GDP), FDI, and Export (EX) and Industrial Production (IIP), FDI, and EX. However, the elasticity coefficients between FDI and GDP and FDI and IIP turned out to be negative but the elasticity coefficients between EX and GDP and EX and IIP are positive. It implies that FDI does not matter in the growth of the economy, but EX contributes to the growth in India. Therefore, in order to achieve higher economic growth, it is advisable to open up the export-oriented sectors in India.

Suggested Citation

  • Dukhabandhu Sahoo & Maathai K Mathiyazhagan, 2002. "Economic Growth in India: Does Foreign Direct Investment Inflow Matter?," Working Papers 115, Institute for Social and Economic Change, Bangalore.
  • Handle: RePEc:sch:wpaper:115

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    References listed on IDEAS

    1. Bartone, Carl & Bernstein, Janis & Wright, Frederick, 1990. "Investments in solid waste management : opportunities for environmental improvement," Policy Research Working Paper Series 405, The World Bank.
    2. Evans, Peter, 1996. "Government action, social capital and development: Reviewing the evidence on synergy," World Development, Elsevier, vol. 24(6), pages 1119-1132, June.
    3. Madhushree Sekher, 2000. "Local Organisations and Participatiory CPR Management: Some Reflections," Working Papers 61, Institute for Social and Economic Change, Bangalore.
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    Cited by:

    1. Chakraborty, Chandana & Nunnenkamp, Peter, 2008. "Economic Reforms, FDI, and Economic Growth in India: A Sector Level Analysis," World Development, Elsevier, vol. 36(7), pages 1192-1212, July.

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    Economic Growth; Foreign Investment; FDI Inflow;


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