Category: Economics »

Establishing a relationship between FDI and environment

The previous articles analysed the impact of foreign direct investment (FDI) on the economy of India in the post-reform period. However, one cannot make a systemic assessment of the foreign investment without looking at the cost. The reason is simple. Rapid industrialisation has cost India its environmental health. Economic and environmental performances are complimentary for development because the environment provides all the natural resources necessary for the production of goods and services. Production leads to growth but the by-products and wastes create pressure on the environment, resulting in pollution. Read more »

Analysis to find impact of FDI inflows on GDP of India

Foreign Direct Investment (FDI) is a vital catalyst for economic growth. Over the years, FDI has developed impressively in its significance for Indian economy especially after liberalization. The previous article highlighted the importance of Gross Domestic Product (GDP) as one of the main indicators of economic performance of a country. The aim of this article is to empirically analyse and investigate the impact of FDI inflows on GDP in India after establishing long run association and causality between these two variables. Read more »

Factors affecting the economic performance of a country

Economic performance of a country is measured by economic growth and the most commonly used indicator for economic growth of a country, its Gross Domestic Product (GDP) or Gross National Product (GNP). GDP is the aggregate value of all final goods and services produced in the domestic territory of an economy or a country in a certain period of time. GNP is GDP adjusted for domestic workforce working abroad and the foreign workforce working in the domestic economy. Although economic growth alone is not a sufficient condition for economic development, it is a necessary condition for an economy to be healthy and performing well. Read more »

Importance of outward FDI to the Indian economy

Trade liberalization in India post 1991 has transformed the scenario of capital influx in the country and has triggered the growth of secondary and tertiary sectors significantly. The growth dynamics of Indian economy especially the service sector propelled forward. Due to increased revenues, outward Foreign Direct Investment (FDI) (i.e. FDI outflow) of India has also been significant (Someshu., 2010). Given the fact that FDI inflow and its impact in India is a major area of discussion and interest, similarly outward FDI can be also contemplated as an important subject of discussion. Outward FDI is a mechanism through which a domestic firm expands its operations to other countries. Outward FDI in India mainly occurred after the year 2003. During the economic crisis in the year 2008-09. Due to which the outward FDI flow increased significantly. The following graph depicts the trend of the flow during the past 15 years. Read more »

Reforms in policies and regulations of FDI in India

Foreign Direct Investment (FDI) has been one of the most critical factors in the economic health of emerging markets like India. It is the process of establishment of business or carrying out business activities in the host country by a foreign country. The Government of India had undertaken major reforms in the country’s FDI policies in 1991. The most recent policies allowed for increasing the FDI limit. Read more »

Impact of FDI inflows on total factor productivity of India

The previous article showed a positive and significant impact of Foreign Direct Investment (FDI) on exports from India. This article attempts to empirically examine the relationship between FDI inflows and Total Factor Productivity (TFP). There are different types of factors of production; single or partial factor profitability. Labour and capital efficiency are examples of this. It is contended that in the short run, labour productivity is the best measure of factor productivity. But if one has to measure in the long-run, total factor productivity is better than labour productivity (Sargent and Rodriguez, 2000). Read more »

Impact of FDI inflows on exports of India

The previous article empirically examined the relationship between Foreign Direct Investment (FDI) inflows and the rate of inflation in Indian economy. The aim of this article is to investigate the impact of FDI inflows on the exports of India. The relationship between FDI and exports has been of great interest to researchers especially after the economic liberalisation in 1991. The FDI boost is crucial in order to grow capital, innovation, administrative know-how, marketing skill with access to global markets (UNCTAD, 2003). Read more »

Impact of FDI on the employment sector of India

Foreign Direct Investment (FDI) can be contemplated as one of the most decisive catalysts of generating employment in India. Opening up of trade barriers in India post trade liberalization in the year 1991 has witnessed the influx of FDI at a great extent. Read more »

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