THE INFLOW OF FOREIGN INVESTMENT AS A FACTOR OF DEVELOPMENT IN INDIA

With the transformation of international capital markets, developing countries have become recipients of significant inflows of foreign direct investment (FDI). In recent decades, India has shown the highest growth rate of FDI stock among the BRICS countries. The inflow of foreign capital has become a determining factor of economic development in many countries. Therefore, the aim of this study was to analyze the impact of foreign capital inflows in the form of FDI on the Indian economy during 2000-2020 years. Specifically this period was chosen for the research because it is characterized by the intensification of investment flows to the country. The article analyzes the dynamics, structure, sectoral and regional distribution of FDI flows to India. The results of investment activities of non-residents in the country were also considered in the study. Dividends and withdrawals from income of quasi corporations were found to have increased to record levels in recent years. Investment income payments to non-residents are small relative to total current account liabilities. However, if this trend intensifies, it will negatively affect the current account, which has constantly remained in deficit over the past decade. To determine the role of foreign capital in the economic development of India, a number of regression models were built. Regression analysis of selected items of the current account was carried out to determine the existence of a relationship between FDI flows and the state of the country’s balance of payments. The results of the study confirmed the existence of a significant relationship between FDI and exports, imports and payments of investment income to non-residents. It was also found that FDI inflows contribute more to the formation of export than import. To assess the impact of FDI on India’s economic growth, a regression model for the formation of GDP was built based on the Cobb-Douglas production function. The regression analysis of India’s GDP confirmed a significant positive dependence of GDP on FDI, but showed that foreign capital plays a relatively modest role in the country’s economic growth.

Analysis of investment activity in the Baltic region

Journal of Economics and International Relations ◽

10.26565/2310-9513-2019-10-05 ◽

2019 ◽

Keyword(s):

Economic Development ◽

Regression Analysis ◽

Current Account ◽

Foreign Capital ◽

Balance Of Payments ◽

Baltic Region ◽

Investment Activity ◽

Baltic Countries ◽

Investment Income ◽

The Baltic

The article studies the role of foreign capital in the Baltic countries. The subject of the study is the structure and dynamics of foreign capital in Latvia, Lithuania and Estonia. The goal is to analyze the influence of foreign capital on the economic development of the Baltic countries. The objective is to consider in more detail the flows of foreign direct investment, portfolio investment and other types of investments, to identify the main investor countries, to consider the balance of payments and to construct regression models of influence of foreign capital on the economic development of countries. General scientific methods are used: scientific abstraction, comparative, method of analysis and synthesis, systematization and generalization, method of calculation, and also a method of regression analysis. The following results are obtained: investment activity is an important component for the economies of the Baltic countries. The leader in attracted capital not only in the region, but also in the EU is Estonia, and in terms of investment abroad – is Lithuania in the Baltic region. The main areas where capital is directed are: financial sector, industrial and IT-technologies. Regression analysis shows that the outflow of capital from the Baltic countries abroad positively affects the development of their economies. Conclusions: the balance of payments regulation for Latvia should take place only by increasing the "credit" part of the current account, and for Lithuania – by increasing both the current account and the investment liabilities, because there is the inverse dependence of GDP on investment income, which is directed to foreign investors in the model for the first country, while for Lithuania there is a direct dependence of exports on investment income abroad.

Attracting foreign capital as a factor in ensuring the country's economic growth

Socio-Economic Problems of the Modern Period of Ukraine ◽

10.36818/2071-4653-2020-5-7 ◽

2020 ◽

pp. 34-41

Author(s):

Taras Malyshivskyi ◽

Volodymyr Stefinin

Keyword(s):

Economic Growth ◽

Economic Development ◽

Foreign Direct Investment ◽

Low Income ◽

Direct Investment ◽

Foreign Capital ◽

Local Level ◽

Current Trend ◽

Raw Material ◽

Foreign Capital Inflows

The article examines the relationship between attracting foreign capital in the form of foreign direct investment and ensuring economic development. In particular, the analysis of the current structure of the economy is indicated, its raw material character is pointed out and, based on other researches, the necessity of its reform is substantiated, as Ukraine will remain a low-income country if the current trend continues. This is due to the fact that countries with a raw material structure of the economy are characterized by a low level of economic complexity, and therefore are not able to generate high levels of income in society. As a result, the expediency of stimulating the attraction of investment resources into the country’s economy, in particular in the form of foreign direct investment, is substantiated. The dynamics of attracting foreign direct investment to Ukraine and a number of other countries for the period from 1991 to 2019 is analyzed and the key negative factors that deter foreign investors from investing in the economy of Ukraine are indicated. As a result of the analysis, divergent trends in the economic development of Ukraine and other analyzed countries (Poland, Czech Republic, Slovakia, Turkey, Romania, Hungary) were identified, which contributed to economic stagnation and restrained economic growth and development. Taking into account the analysis, as well as based on the concept of investment and innovation growth, it is proposed to use the experience of Israel to improve the country’s investment attractiveness and stimulate foreign capital inflows by adapting the Yozma program to Ukrainian realities. According to our estimates, the adaptation of this program to the Ukrainian economy will attract about $ 350 million over a five-year period of venture capital alone. In addition, programs such as YOSMA can also be implemented at the regional or even local level. We believe that the use of this tool will improve the investment attractiveness of the country, as well as provide sufficient financial resources to modernize the domestic economy and ensure rapid economic growth.

Foreign Capital Inflows and the Current Account Imbalance: Which Causality Direction?

Journal of Economic Integration ◽

10.11130/jei.2008.23.2.434 ◽

2008 ◽

Vol 23 (2) ◽

pp. 434-461 ◽

Cited By ~ 7

Author(s):

Ho-don Yan ◽

Cheng-lang Yang

Keyword(s):

Current Account ◽

Foreign Capital ◽

Capital Inflows ◽

Foreign Capital Inflows ◽

Are there different linkages of foreign capital inflows and the current account between industrial countries and emerging markets?

Empirical Economics ◽

10.1007/s00181-011-0478-8 ◽

2011 ◽

Vol 43 (1) ◽

pp. 25-54 ◽

Cited By ~ 10

Author(s):

Ho-don Yan ◽

Cheng-lang Yang

Keyword(s):

Emerging Markets ◽

Current Account ◽

Foreign Capital ◽

Capital Inflows ◽

Industrial Countries ◽

Foreign Capital Inflows ◽

Financial Liberalization, Economic Growth and Investment Strategy: Lessons from Taiwan for New Industrial Countries

Journal of Business Theory and Practice ◽

10.22158/jbtp.v3n2p188 ◽

2015 ◽

Vol 3 (2) ◽

pp. 188 ◽

Cited By ~ 1

Author(s):

Yu-Wei Lan ◽

Dan Lin ◽

Lu Lin

Keyword(s):

Economic Growth ◽

Institutional Investors ◽

Foreign Capital ◽

Investment Strategy ◽

Capital Inflows ◽

Investment Efficiency ◽

The Real ◽

Foreign Capital Inflows ◽

Foreign Institutional Investors ◽

To examine the impact of foreign capital inflows on Taiwan’s economy after internet bubbles of 2000, this study adopts data from the first quarter of 2001 to the second quarter 2015 to test if foreign capital inflows have positive impacts on Taiwan’s economic growth. This study also uses program trading and aims to prove that with financial liberalizations, the investment efficiency of foreign institutional investors is better than domestic institutional investors.The results from the error correction model shows that capital formation, domestic savings and foreign direct investment all have positive relationships with the real economic growth. However, the rate of financing and foreign debt and depreciation all have negative relationships with the real economic growth. The results are all statistically significant. Hence, they do not completely support the hypothesis that foreign capital inflows are beneficial for economic growth.Moreover, this study proves that the futures market in Taiwan is not strong-form market efficient. This result provides support for the hypothesis that the investment efficiency of foreign institutional investors is higher than that of domestic institutional investors. Investors can therefore raise their investment performance by following the investment strategies of foreign institutional investors.

The Impact of ICT and FDI as Drivers to Economic Growth In ASEAN-8 Countries: A Panel Regression Analysis

International Journal of Industrial Management ◽

10.15282/ijim.9.0.2021.5958 ◽

2021 ◽

Vol 9 ◽

pp. 91-98

Author(s):

Noraina Mazuin Sapuan ◽

Mohammad Rahmdzey Roly

Keyword(s):

Economic Growth ◽

Economic Development ◽

Regression Analysis ◽

Panel Regression ◽

Information And Communication ◽

Asean Countries ◽

Using Data ◽

The Impact ◽

The Relationship ◽

Positive Effect

Over the last few years, information and communication technology (ICT) has become a key catalyst for economic growth. The durability of this technology is demonstrated by the rapid proliferation of the Internet, mobile phones and cellular networks across the globe. However, among economic scholars, the question of exactly how the spread of ICT affects economic development and FDI, especially in ASEAN countries with differences in levels of income, remains unanswered. The aim of this study was essentially to explore the relationship between ICT dissemination, FDI and economic growth in ASEAN-8 countries. By using data from 2003 to 2017, the panel regression analysis was used to evaluate these relationships. The results showed that the dissemination of ICT and FDI are important and they have a positive effect on the ASEAN-8 countries’ economic development.

The Impact of Current Account Deficit on Economic Growth: An ARDL Approach

10.51240/jibe.2020.1.5 ◽

2020 ◽

Vol 21 (1) ◽

pp. 76-92

Author(s):

Tamma Reddy ◽

T. Sita Ramaiah

Keyword(s):

Economic Growth ◽

Exchange Rate ◽

Current Account ◽

Unit Root ◽

Current Account Deficit ◽

External Debt ◽

Unit Root Test ◽

Output Growth ◽

The Impact ◽

In this study, we examine the linkages between External debt, Exchange rate, Current account deficit, and GDP at Factor cost for India over the period of 1975-76 to 2018- 19 using the Unit root test and Autoregressive Distributed Lag (ARDL). The results of the unit root test reveal that GDP growth rate and External debt are integrated at the level I(0); while the Current Account deficit and Exchange rate are integrated at first order I(1). The results of the ARDL technique reveal that the current account deficit has a positive and significant impact on Real GDP. It clearly reflects the role of imports in accelerating the growth of a developing economy like India. There is also evidence that the external debt has a positive and significant impact on the Current account deficit while the Exchange rate does not have an impact on the Current account deficit. The authors opine that the external debt assists in a gradual reduction in the current account deficit and contributes to economic growth by narrowing down the saving-investment gap. As the demand for Indian exports is inelastic in the global market, the country has not benefitted from the depreciation of its currency. The authors stressed the need for focusing on further diversification of its export markets, creating a conducive environment for attracting longer-term FDIs, liberalization, promoting commercial services exports, and achieving exchange rate stability in the context of the USA-China trade war and stagnation in the world output growth. Huge untapped potential for IT-enabled services should be exploited to promote service trade. The authors point out the current account deficit in the range of 2-3 percent of GDP can be manageable.

The Impact of Industrialization on The Regional Economic Development and Community Welfare

Signifikan Jurnal Ilmu Ekonomi ◽

10.15408/sjie.v6i2.5334 ◽

2017 ◽

Vol 6 (2) ◽

pp. 231-246

Author(s):

Sutikno Sutikno ◽

Muhammad Sri Wahyudi Suliswanto

Keyword(s):

Economic Growth ◽

Monte Carlo Simulation ◽

Economic Development ◽

Regression Analysis ◽

Regional Economic Development ◽

Research Setting ◽

Regional Economic ◽

Confirmatory Factor ◽

Simulation Results ◽

This study was aimed to determine the impact of industrialization on the regional economic development. Gresik regency was chosen as the research setting for it is one of largest industrial areas in East Java. The analysis instruments used were: First, the regression analysis, to determine the impact of industrialization on economic growth, unemployment, and poverty. Second, Confirmatory Factor Analysis (CFA), it was used to investigate the impact of industrialization on the community welfare. Third, Monte Carlo simulation that used to formulate a recommendation. The result showed that the industrialization in Gresik still has not been able to give extensive significant impact for the community in Gresik regency and its existence can only be enjoyed by nearby residents. Based on the simulation results, showed that the strong commitment between Gresik local government and the industry in order to address the problem of unemployment is very necessary due to its’ greatest impact.DOI: 10.15408/sjie.v6i2.5334

The impact of foreign capital inflows on economic growth on selected African countries

African Journal of Economic and Management Studies ◽

10.1108/ajems-01-2018-0021 ◽

2018 ◽

Vol 9 (4) ◽

pp. 523-536 ◽

Cited By ~ 5

Author(s):

Mohammad Mowlaei

Keyword(s):

Economic Growth ◽

Foreign Capital ◽

Economic Planning ◽

Data Sets ◽

Domestic Investment ◽

African Countries ◽

Content Type ◽

Short Run ◽

Foreign Capital Inflows ◽

Purpose Nowadays, foreign capital inflow (FCI) is considered as a catalyst for economic development and an important source of transferring technology and foreign exchange earnings from developed to developing countries. The purpose of this paper is to study, first, the impact of different forms of FCIs, namely, foreign direct investment (FDI), personal remittances (PR) and official development assistant (ODA) on economic growth on 26 top African countries; and, second, which of them is more effective on economic growth of the studied countries. The results of this paper are very important for host governments’ policy and help them to design their economic plans to absorb the suitable foreign inflow. Design/methodology/approach The paper uses Pooled Mean Group (PMG) econometric technique to estimate the heterogeneous panels over the period 1992–2016. Findings The results of the study show that all three forms of FCIs have positive and significant effects on economic growth in the long and short run. However, the PR had the most effect on economic growth in the long and short run. The study suggests that the governments should design and implement appropriate fiscal, monetary and trade policies in order to create and improve an enabling environment to attract FCIs as a supplementary source of domestic investment. Research limitations/implications The research limitations of this paper are as follows: data sets of FDI, PR and ODA were available not for all African countries; and, data sets that were available were of before the year 1992. Thus, the research is done for the African countries which had the data sets after the year 1992. Practical implications The result of this paper indicates the impact of each FDI, PR and ODA in economic growth. So, countries can take more attentions to each of them on economic planning. Social implications FCIs are one of the important external source of exchange for each country. So, the study of importance of each of them is necessary for economic planning. Originality/value Most of the previous studies have examined the impact of three different forms of FCIs on economic growth separately, on different countries and regions and using various models and econometric techniques. One of the contributions of this paper is focused on the impacts of FDI, PR and ODA on economic growth separately and simultaneously in 26 top recipient African countries and using the PMG technique which is an advanced econometrical estimation and studied less about it. The other contribution of this research is the comparison of the impact of different FCIs on economic growth, and it is very important for governments’ economic policy.

Foreign Capital Inflows and Domestic Savings in Pakistan: Cointegration Techniques and Error Correction Modelling

The Pakistan Development Review ◽

10.30541/v41i4iipp.825-836 ◽

2002 ◽

Vol 41 (4II) ◽

pp. 825-836 ◽

Cited By ~ 1

Author(s):

Mohsin Hasnain Ahmad ◽

Qazi Masood Ahmed

Keyword(s):

Economic Growth ◽

Foreign Capital ◽

Developed Countries ◽

Capital Inflow ◽

Domestic Saving ◽

Saving Rate ◽

Domestic Investment ◽

Domestic Savings ◽

Foreign Capital Inflows ◽

The various form of inflow of foreign capital (loans, FDI, grant and portfolio) was welcome in developing countries to bridge the gap between domestic saving and domestic investment and therefore, to accelerate growth [Chenery and Strout (1966)]. Some other have been challenged the traditional view that foreign aid impedes domestic savings growth and mobilisation and have economic growth.1 Much attention have been paid in past 30 years, relationship between foreign capital flows and domestic saving, the main purpose of these studies have been determined whether in less developed countries foreign capital inflow and domestic saving are complementary or substitute. However, there is a controversy at theoretical and empirical levels, over the effects of foreign capital on both economic growth and national saving. A number of studies in Pakistan have been conducted during the early 1990s to examine the relationship between saving and foreign capital inflow.2 All studies shows the inverse relationship between foreign capital inflows3 (aggregate level) and saving rate, but the impact of FCI at disaggregate levels (loans, grants, FDI) on saving rate show different magnitude and signs, similarly impact of FCI on decomposition of saving rate (Public, private, household, corporate) also have different magnitude and sign.