Foreign Direct Investment Inflows to India

H.S. Sidhu and Neerja Dhingra

Foreign Trade Review, 2009, vol. 44, issue 3, 24-56

Abstract: India, without exception, as in case of other developing countries, is eager to prompt its economic growth which compels it to accept and seek assistance of foreign direct investment (FDI). At present, it accounts for 1.25 per cent share of global FDI inflows, 7.18 per cent of Asian inflows and garners more than two third share of FDI inflows to the developing South Asia. Present study traces the history of FDI in India and reveals that actually FDI in India is an evolution since mid-eighteenth century and is an outcome of international and domestic dynamisms. It is not merely a phenomenon of post Independence or post liberalization period. Present study is an effort to examine the growth of FDI inflows to India and some selected representative countries of the developing Asia, through the computation of compound annual growth rates by fitting an exponential function estimated by ordinary least square method. It is detected that during the last three decades, the growth of FDI inflows remained highest in case of India followed by UAE, Turkey and China. What will happen in future is the function of what happened in the past. Believing this, the study has generated the forecasts of FDI inflows to the representative countries of Asia for the period 2009 to 2020, by using Double Exponential Smoothing Model. The adequacy of the model is tested by computing autocorrelation coefficients and Ljung-Box Q statistics. The study revealed that in the ensuing decade, out of all the countries of developing Asia, Saudi Arabia is expected to grow at the fastest pace as far as FDI inflows are concerned. In near future, although the magnitude of FDI inflows may remain highest in case of China but India is expected to leap forward swiftly and attract more than one seventh share of aggregate anticipated inflows to the developing Asia.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:sae:fortra:v:44:y:2009:i:3:p:24-56

DOI: 10.1177/0015732515090302

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