FDI AND ECONOMIC GROWTH IN INDIA

The gains from FDI inflows are unquestionable as it contributes to economic growth through an increase in productivity by providing new investments, better technologies and managerial skills to the host country. While the trade liberalization facilitates economic growth through efficiency in production by utilizing the abundant factors of production more effectively and absorbing better technologies from advanced countries on the one hand, it may harm the growth process through various forms of macro-economic instability and balance of payments crisis, on the other. Thus, it is a challenge for developing countries like India to explore the role FDI and trade liberalization should play in the country’s economic growth.

This book examines the relationship between FDI and economic growth in Indian context, and also identifies the motivating factors and problems of FDI inflows. We employ bi-variate regression and ordinary least squares (OLS) estimation to examine the effect of FDI on GDP growth using the data for the period 1974-2011. The results show that FDI is positively correlated with GDP growth and has positive effect on economic growth too.

The book will interest both policy makers and students and teachers of economics alike.

Narayan Sethi is Assistant Professor in Economics, Department of Humanities and Social Sciences, National Institute of Technology (NIT), Rourkela, Odisha. He has published books and research articles in the area of international trade and finance.
Sanhita Sucharita is Assistant Professor in Economics, School of Social Sciences, Central University of Jharkhand, Ranchi. Her area of specialization is public finance and development economics, in which she has published research articles in both national and international journals.