Foreign Direct Investment in the Make in India Era

2021 ◽  
pp. 474-479
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Trade Openness ◽  
Fdi Inflows ◽  
Dummy Variable ◽  
The Government ◽  
Long Term Impact

The present study attempted to examine the recent effects of FDI on India's economic growth in the Make in India initiative (MII) launched by the government. The trends of FDI inflows in India showed that when the CAGR of FDI inflows was -2.78 percent from 2008 to 2014 (pre-Make in India), the CAGR of FDI inflows was 8.54 percent between 2014 to 2020 (Post-Make in India). Further, the OLS results showed that the variables such as FDI inflows, trade openness, and exchange rate significantly impact India's economic growth. The dummy variable that stood for the Make in India initiative had a statistically significant impact on growth. The predictions about FDI inflows showed an upward trajectory since 2021-2022, which suggested that India may have further scope to attract more FDI into the country if they continue to do reforms like before and enhance competitiveness, and FDI may have a long-term impact on GDP.

scholarly journals Determinants of Foreign Direct Investment in Saudi Arabia: A Review

2017 ◽  
Vol 9 (7) ◽  
pp. 222
Author(s):  
Haga Elimam
Keyword(s):  
Economic Growth ◽  
Saudi Arabia ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Trade Openness ◽  
Maximum Flow ◽  
International Capital ◽  
Host Government ◽  
The Government

Foreign direct investment is identified as the major tool for the movement of international capital. Thus, the study has employed a review research to examine the determinants of foreign direct investment in Saudi Arabia. The results are significant as they have contributed towards determinants of foreign direct investment by comparing with previous studies. The results showed that trade openness, infrastructure availability, and market size play significant role in attracting foreign direct investment within a country. The inflow of foreign direct investment has a potential to benefit the investing entity as well as the host government. It also renders economic growth and socioeconomic transformation of the country. The flow of foreign direct investment in Saudi Arabia is affected by several factors including growth rate, GDP, exports and imports. It is the duty of the government to ensure the attractiveness of their country to maintain maximum flow of foreign direct investment, as it promotes sustained long-term economic growth by increased investment in the human capital.

scholarly journals Influence of Exchange Rate on Foreign Direct Investment Inflows: An Empirical Analysis Based on Co-Integration and Granger Causality Test

2021 ◽  
Vol 2021 ◽  
pp. 1-12
Author(s):  
Lan Tan ◽  
Yifan Xu ◽  
Alemayehu Gashaw
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Close Association ◽  
Causality Test ◽  
Fdi Inflows ◽  
The Exchange Rate

Although it is widely recognized that Foreign Direct Investment (FDI) inflows have a dominant effect on economic growth of host countries, the determinants of FDI inflows are still unclear. Especially, about the effect of exchange rate on FDI inflow, the results reached by scholars vary across countries or regions. It is of great practical and theoretical significance to explore the influencing effects of exchange rate on FDI inflow and identify the mechanisms that underlie them in close association with regional economic characters so as to help local government implement targeted government policies to achieve sustainable FDI inflow and sustainable economic growth. For this purpose, the influencing effects and the influencing mechanisms of the exchange rate on FDI inflows are investigated for Zhejiang province, China, over 1985–2019 by employing the co-integration tests, vector error correction models, Granger causality tests, and impulse response tests. Empirical results indicate that there are long-term stable and unidirectional causal relationship between the exchange rate and FDI inflow. Continuous appreciation of RMB against USD discourages FDI inflow. The mechanism which underlies the long-term relationship is the wealth effect, rather than the cost effect or the demand effect. By contrast, in the short run, neither the exchange rate nor the three influencing mechanism has a significant impact on FDI inflow. These results suggest policy recommendations for improving FDI by accumulating human capital and improving infrastructure. These findings are also applicable for other countries or regions with similar economic characters.

An empirical analysis among foreign direct investment, trade openness and economic growth: evidence from the Indian economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reenu Kumari ◽  
Malik Shahzad Shabbir ◽  
Sharjeel Saleem ◽  
Ghulam Yahya Khan ◽  
Bilal Ahmed Abbasi ◽  
...  
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Time Series Data ◽  
Trade Openness ◽  
Series Data ◽  
Fdi Inflows ◽  
Content Type ◽  
Study Results

PurposeThis study examines the long-term and causal relationship among foreign direct investment (FDI) inflows, trade openness and economic growth from India.Design/methodology/approachThis study has used annual time series data from the period 1985–2018 and applied the Johansen cointegration and vector autoregression (VAR) model.FindingsThe results of Johansen's cointegration confirm no long-term relationship among all the above three variables. Further, the results of VAR Granger causality indicate that FDI causes economic growth and economic growth causes FDI, which confirms the bi-directional causality. In contrast, this study found that there is no bi-directional causality between trade openness and economic growth.Social implicationsThrough this study, the government could take the decisions related to foreign investment after adopting more trade openness because the study results revealed that if India follows more trade openness, then how FDI will flow (upward and downward). With impulse analysis, researchers, government and policymakers take the decision-related FDI inflows for the forthcoming ten years after 2018.Originality/valueThis study has found the most exciting results from the impulse functions of FDI inflows, trade openness and economic growth, which showed the situation of these three variables as increase and decrease in the forthcoming ten years.

A Study on the Impact of Foreign Direct Investment (FDI) on Indian Economy

2017 ◽  
Vol 3 (3) ◽  
Author(s):  
G. Suresh Babu ◽  
C. Sreeramulu
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Policy Framework ◽  
Fdi Inflows ◽  
Internal Resources ◽  
Fund Flow ◽  
The Government ◽  
The Impact

Foreign Direct Investment (FDI) is fund flow between the countries in the form of inflow or outflow by which one can able to gain some benefit from their investment whereas another can exploit the opportunity to enhance the productivity and find out better position through performance. The effectiveness and efficiency depends upon the investors perception, if investment with the purpose of long term then it is contributes positively towards economy on the other hand if it is for short term for the purpose of making profit then it may be less significant. Depending on the industry sector and type of business, a foreign direct investment may be an attractive and viable option. Any decision on investing is thus a combination of an assessment of internal resources, competitiveness, and market analysis and market expectations. The FDI may also affect due to the Government trade barriers and policies for the foreign investments and leads to less or more effective towards contribution in economy as well as GDP of the economy Foreign direct investment (FDI) as a strategic component of investment is needed by India for achieving the economic reforms and maintains the pace of growth and development of the economy. The paces of FDI inflows in India initially were low due to regulatory policy framework but there is a sharp rise in investment flows from 2005 towards because of the new policy has broadened. Foreign direct investment (FDI) has been viewed as a power affecting economic growth (EG) directly and indirectly. The main purpose of the study is to analyse the impact of FDI on economic growth in India.

scholarly journals Determinant of FDI Inflows in OIC Countries

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
Tania Megasari ◽  
Samsubar Saleh
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rates ◽  
Direct Investment ◽  
Trade Openness ◽  
Political Stability ◽  
Fixed Effect Model ◽  
Fdi Inflows ◽  
Macroeconomic Variables ◽  
Effect Model

This study aims to analyze the determinants of foreign direct investment (FDI) in the Organization of Islamic Cooperation (OIC) country members for the period 2005 to 2018 The determinant variables of FDI are corruption, political stability and macroeconomic variables such as inflation, exchange rates, economic growth, and trade openness. Analysis used in the study  is the fixed effect model (FEM) of the OIC data panel.The results showed that economic growth and trade openness had a significant influence on foreign direct investment (FDI), while the effects of corruption, political stability, inflation and the exchange rate have no significant effect on foreign direct investment (FDI).

scholarly journals A time series analysis of determinants of FDI in Afghanistan: Which one matters the most, security or economic growth?

2018 ◽  
Vol 6 (2) ◽  
pp. 19
Author(s):  
Abdul Fareed Delawari
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Foreign Direct Investment ◽  
Time Series Analysis ◽  
Direct Investment ◽  
Economic Factors ◽  
Market Economic ◽  
The Government ◽  
The Relationship

Afghanistan has been practicing market economic system since 2002. Since then, the government has been initiating different policies and announced various incentives to attract foreign direct investment (FDI) to the country. However, the outcome has not been satisfactory due to several political and economic factors. This paper explores the relationship between security, economic growth and FDI in Afghanistan, using ARDL model. The paper covers a period from 2002 to 2016. The empirical results of this study show that there is a negative long-term relationship between security and FDI. Hence,  the author concludes that, to attract FDI to the country, insuring security should be the top priority of the government of Afghanistan.

scholarly journals KAJIAN AKTIVITAS EKONOMI LUAR NEGERI INDONESIA TERHADAP PERTUMBUHAN EKONOMI INDONESIA PERIODE 1998-2014

2017 ◽  
Vol 9 (2) ◽  
pp. 119
Author(s):  
Ryan Hawari ◽  
Fitri Kartiasih
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Forecast Error ◽  
Foreign Debt ◽  
Trade Openness ◽  
Impulse Response Function ◽  
Error Variance ◽  
Forecast Error Variance

Indonesia is a developing country which adopts an “open economic”. That caused Indonesia economic is strongly influenced by factors that come from outside of Indonesia. External factors in this research is referred to foreign debt, foreign direct investment, trade openness and exchange rate of rupiah with USD. The analytical method in this research used Vector Error Correction Model (VECM) which will focused on Impulse Response Function (IRF) and Forecast Error Variance Decomposition (FEVD). Based on result of IRF, exchange rate had a positive effect to economic growth, while foreign debt, foreign direct investment and trade openness had a negative effect to economic growth. Based on result of FEVD, shock on economic growth in Indonesia affected by economic growth itself (43.21%), followed by foreign debt (26.30%), trade openness (14.16%), foreign direct investment (8.29%) and exchange rate (8.04%) Keywords: economic growth, trade openness, VECM, IRF, FEVD

scholarly journals Trade Openness and Economic Growth Nexus in Pakistan

2020 ◽  
Vol V (III) ◽  
pp. 22-33
Author(s):  
Ghulam Yahya Khan ◽  
Muhammad Masood Anwar ◽  
Aftab Anwar
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Granger Causality ◽  
Direct Investment ◽  
Trade Openness ◽  
Explanatory Variables ◽  
Integration Approach ◽  
Long Run

This study explores the nexus amongst trade openness and economic growth for Pakistan for 1981-2019. Trade-openness is a dependent variable, and it is measured as imports plus exports to GDP ratio. Economic growth, Foreign Direct Investment, Inflation, Exchange rate, and interest rate are taken as explanatory variables. Co-integration approach by Johansen and Juselius (1988, 1991) has been used for long-run relationships. Results indicate that Trade-Openness has significantly affected the economic growth and other control variables of the study for Pakistan. There exist bidirectional Granger Causality in the selected variables.

scholarly journals What worth is a BIT? Impact of BITs on FDI Inflows into India

2018 ◽  
Vol 4 (02) ◽  
Author(s):  
Anshuman Kamila ◽  
Mitali Chinara
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Best Practice ◽  
Foreign Investors ◽  
Fdi Inflows ◽  
New Model ◽  
Indian Model Bit ◽  
The Government

Developing countries often consider foreign direct investment (FDI) as an engine to boost economic growth. Therefore they try to promote investment inflow by various means. One approach is to offer investment guarantees to foreign investors using Bilateral Investment Treaties (BITs). Following international best practice, India has signed a number of BITs to stimulate inflow of FDI. Till date, the Government of India has signed BITs with 83 countries. These BITs were largely negotiated on the basis of the Indian Model BIT of 1993. There have been recent moves that point in the direction of India fundamentally altering the text of its BITs with countries, including calling off existing BITs and approving a new model BIT. However, concerns have been raised as to the possible pernicious impact of these changes on the inflow of FDI into India. This paper investigates whether the concern is warranted at all – by asking if BITs significantly impact the inflow of FDI. It is established that BIT is indeed a veritable boost to FDI inflow, and the estimated coefficient remains significant and robust across econometric specifications. Therefore, a note of caution is sounded for the rejigging exercise involving BITs that has been initiated by India.

scholarly journals How Trade Openness and Foreign Direct Investment Affect Economy of Pakistan

2021 ◽  
Vol 11 (2) ◽  
pp. 1641-1653
Author(s):  
Noreen Safdar
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Direct Investment ◽  
Trade Openness ◽  
Time Span ◽  
Independent Variables ◽  
Long Run ◽  
Short Run ◽  
The Growth Of Economy

This study is intended to find out how and to what extent FDI and trade openness affect the growth of economy in Pakistan for time span 1980-2018. To examine influence of FDI and trade openness, GDP was used by way of dependent variable whereas FDI, trade openness, exchange rate, and inflation are also taken as independent variables. The ARDL technique is employed in following study to estimate short-run and long-run results. This study concludes that TO have a positive momentous influence on GDP in both long and short run. While Foreign Direct Investment has an optimistic but irrelevant influence on GDP in Pakistan which demonstrates that TO has a more progressive influence on GDP of Pakistan than FDI. Other variables labor force and inflation harm economic growth while the exchange rate affects GDP positively. It is suggested by the study to enhance economic growth, govt should focus on liberalization of trade by reducing tariffs, customs duties, and other types of taxes on exports to enhance the economic growth of Pakistan.

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