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Home country impact on Outward FDI from India

Rishika Nayyar and Jaydeep Mukherjee ()

Journal of Policy Modeling, 2020, vol. 42, issue 2, 385-400

Abstract: The altering policy environment in emerging markets and the surge in their outward foreign direct investment (OFDI) calls for an empirical investigation. Accordingly, this paper examines the effect of home country macroeconomic conditions and Government policies on the OFDI flows from India during the period 1984 to 2015. Incorporating the structural breaks in the empirical model, results indicate the existence of a long-run relationship between OFDI flows and home country macroeconomic and Government policies. Government policies relating to foreign trade and investment and financial sector development are found to be significant determinants. The results also suggest the need for the Government to enhance its effort on the development of knowledge infrastructure in order to support the OFDI from India's manufacturing sector and thereby contribute to the success of “Make in India” programme. Policy implications are discussed.

Keywords: Foreign direct investment; India; Policy; Make in India (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jpolmod.2019.06.006

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