Title: Foreign direct investment and macroeconomic factors: evidence from Indian economy

Authors: Asha Nadig; T. Viswanathan

Addresses: School of Commerce and Management Studies, Dayananda Sagar University, Hosur Main Road, Kudlu Gate, Bengaluru 560068, India ' Symbiosis Institute of Business Management, Constituent of Symbiosis International (Deemed University), 95/1, 95/2, Electronics City Phase 1, Hosur Road, Electronic City, Bengaluru, Karnataka 560100, India

Abstract: The World Investment Report for 2017 released by UNCTAD projected that FDI inflows to developing Asian countries will increase by 15% in 2017, to $515 billion. With a boost in investor confidence in the economic outlook in major Asian economies, India is the second most preferred destination in the world as regards FDI inflows. This paper examines the relationship between FDI and macroeconomic factors, like, GDP, FER, employment, exports, and GCF for the period 1978-1979 to 2016-2017. Techniques like augmented Dickey-Fuller test, multivariate regression analysis Johansen's co-integration test, impulse response analysis and Chow breakpoint test, multiple breakpoint test and Bai-Perron sequentially determined breaks test are used. The findings suggest that there is a significant correlation between FDI and the macroeconomic factors. The results of Johansen's co-integration test reveal that there is a long run causal relationship between FDI and other variables.

Keywords: foreign direct investment; FDI; gross domestic product; foreign exchange reserves; employment; exports; gross capital formation; augmented Dickey-Fuller test; multi-variate regression analysis; Johansen's co-integration test; impulse response analysis; chow breakpoint test; multiple breakpoint test; Bai-Perron sequentially determined breaks test.

DOI: 10.1504/IJPSPM.2023.128535

International Journal of Public Sector Performance Management, 2023 Vol.11 No.1, pp.62 - 80

Accepted: 11 Mar 2020
Published online: 26 Jan 2023 *

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