IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH: EVIDENT FROM INDIAN ECONOMY

Abstract

Foreign Direct Investment is considered to be one of the major contributors to the growth of economies thus attracting researcher’s attention to this area. FDI is well known for driving economic growth thus this paper attempts to investigate the impact of Foreign Direct Investment on the Economic Growth of India. FDI is assumed to be a crucial driving force of the economic growth of the nation. However, empirical evidence shows mixed results. We aim to establish both the long and short-term impact of FDI on growth. Time series data for two decades ranging between the time period from 1991 to 2020 has been used and results reveal there is a significant influence of FDI on economic growth in the long run, also in the short run FDI directly as well as indirectly affects the growth via its integration with human capital.