Does the current account balance influence foreign direct investment in the Indian economy? Application of quantile regression model

Md. Hasanur Rahman ()
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Md. Hasanur Rahman: Sheikh Fazilatunnesa Mujib University

SN Business & Economics, 2023, vol. 3, issue 5, 1-18

Abstract: Abstract The primary objective of this study was to measure the influence of the current account balance (CAB) on foreign direct investment (FDI) in India’s economy by considering gross domestic product (GDP). As a result, India adopted economic liberalization in 1991 with the new policy support, and there appeared to be an increase in foreign direct investment in the country. The augmented Dickey–Fuller (ADF) test suggests the quantile regression (QR) method using time series data from 1975 to 2021. Moreover, the results indicate that gross domestic product and the current account balance have a positive impact on FDI. Because of the large volume of trade in India, the government should focus on the balance of payments and current account as a determinant of FDI. However, this study added value to existing literature with the best magnitude on foreign direct investment and international trade policy.

Keywords: Current account balance; Economic growth; Foreign direct investment; Quantile regression; Trade balance (search for similar items in EconPapers)
JEL-codes: C22 F14 F21 F63 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s43546-023-00471-y

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