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Examining the determinants of FDI inflows in India


by Shiba Shankar PATTAYAT

Theoretical and Applied Economics, Volume XXIII (2016), No. 2(607), Summer

This paper basically highlights the determinants factors of FDI and how these factors are affecting FDI which is the most important factors of economic growth. It includes GDP as a dependent variable and FDI, Trade Openness and Exchange rate are the independent variables. This study has used time series data which are from various secondary data sources like IMF, RBI etc. and installed ADF test for checking the stationarity of the data. It has also used Johnson Co-integration test for find out the long run relationship between the dependent variable and independent variables. Signifying the fact that all the variables of the study move together in the long run. If variables are co integrated, the slope coefficients becomes super consistent. Among the long run coefficients, the influence of GDP to inward FDI is the highest which is 2.276. This indicates the role of market size in attracting foreign capital flow.

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