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Econometric Analysis of India's Foreign Direct Investment Inflows

Econometric Analysis of India's Foreign Direct Investment Inflows

Debesh Bhowmik
Copyright: © 2018 |Pages: 28
ISBN13: 9781522530268|ISBN10: 1522530266|EISBN13: 9781522530275
DOI: 10.4018/978-1-5225-3026-8.ch012
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MLA

Bhowmik, Debesh. "Econometric Analysis of India's Foreign Direct Investment Inflows." Foreign Direct Investments (FDIs) and Opportunities for Developing Economies in the World Market, edited by Venkataramanaiah Malepati and C. Mangala Gowri, IGI Global, 2018, pp. 248-275. https://doi.org/10.4018/978-1-5225-3026-8.ch012

APA

Bhowmik, D. (2018). Econometric Analysis of India's Foreign Direct Investment Inflows. In V. Malepati & C. Gowri (Eds.), Foreign Direct Investments (FDIs) and Opportunities for Developing Economies in the World Market (pp. 248-275). IGI Global. https://doi.org/10.4018/978-1-5225-3026-8.ch012

Chicago

Bhowmik, Debesh. "Econometric Analysis of India's Foreign Direct Investment Inflows." In Foreign Direct Investments (FDIs) and Opportunities for Developing Economies in the World Market, edited by Venkataramanaiah Malepati and C. Mangala Gowri, 248-275. Hershey, PA: IGI Global, 2018. https://doi.org/10.4018/978-1-5225-3026-8.ch012

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Abstract

In this chapter, the author explains the trend lines, random walk, stationary, structural breaks, and volatility of FDI inflows in India during 1971-2015. Both log linear and exponential trends are significant. FDI inflows are stationary and showed four structural breaks in 1985, 1994, 2000, and 2006. The author found the relation among FDI inflows, growth rate, interest rate, inflation rate, exchange rate, fiscal deficit, external debt, and trade openness with the help of Granger causality, Johansen cointegration test, and vector error correction models. Trace statistic has four cointegrating equations, and Max Eigen statistic has three cointegrating equations. The speed of the vector error correction process is more or less slow except for change in interest rate and change in inflation rate, which are significant where VECM is stable and diverging. Limitations and future scope of research is added. Policy recommendations are also included.

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