Impact Of Fdi On Macroeconomic Factors Of India

The impact of Interest rate, Inflation rate, and Gross Domestic Product, on Economic Growth Rate

The report bases on the theories of relative cost of production and the relative wealth effect analyzes the potential impact caused by exchange rate upon foreign direct investment. The target country selected is China; while the research period is identified as 1980 to 2012. In order to undertake the empirical study, the gravity model is referred to when establish the regression model, relying upon the regression results released by Stata. The increase of real exchange rate, i.e. the appreciation of RMB will restrict the inflow of foreign direct investment. Furthermore, the GDP will positively affect the level of foreign direct investment; while the average domestical wage will negatively impact the level of foreign direct investment. In addition, the policy change will generate a dramatic influence upon the level of foreign direct investment and thus has to be taken into deep consideration when the regression analysis is undertook.

The Foreign Direct Investment is stimulated by diverse macroeconomic factors such as the GDP, GDP per capita and also by the political stability of a country. The US is the country, which receives the more FDI in the world; even tough some other countries recently have increased their FDI considerably in term of growth. The overall quality of the infrastructure in the US

After getting independence in 1947, the government of India envisioned a socialist approach based on the USSR system to developing the country’s economy. The last decade of the 20th century witnessed a drastic increase in foreign direct investment (FDI), accompanied by a marked change in the attitude of most developing countries towards inward investment. FDI flows have grown in importance relative to other forms of international capital flows, and the resulting production has increased as a share of world output.. FDI in India has in a lot of ways enabled India to achieve a certain degree of financial stability, growth and development during recession. This money has allowed India to focus on the areas that may have needed economic attention and address various problems that continue to challenge the country. The factors that attracted investment in India are stable economic policies, availability of cheap and quality human resources, and opportunities of new unexplored markets. Mostly FDI are flowing in service sector and manufacturing sector recorded very low investments. The investments in service sector enhanced the benefit of flow of funds to the home country. Presently India is contributing about 17% of

Abadie and Gardeazabel (2007) agreed that the stock markets are the main source of FDI, it is well known. But foreign firms that have been purchased through the stock market are in desperate need of financial services. This way, as a prospective investor makes decisions regarding his investments, he will be able to take into account the country’s financial development and banking development, and determine how such factors will ultimately affect their investments

Indian market is one of the largest market with high purchasing power. Lot s of work to be done in the field of logistics & supply chain management. It is not possible for Indian government alone to developed world class infrastructure and other allied facilities because of huge investment requirement . FDI in India has in a lot of ways enabled India to achieve a certain degree of financial stability, growth and development. In order to create new & more jobs , FDI is the success mantra now. FDI no doubt is creating innovation in retail sector but simultaneously it may pull down the local and domestic retailers of India which is surely a concern to worry about for Indian government. It reduces the gap between farm prices

The FDI & FII mantra is considered an all-purpose panacea for the ills of the Indian economy and society. It has become routine for our finance ministers to "showcase" India in various international forums and exhort the global captains of industry and commerce to come to India. We here want to know about the far-reaching implications of FDI in our economy and, particularly, how it can stifle economic growth.

At the conclusion of this report, I will try to show whether there is a relationship between India’s Foreign Corporate Tax Rate and India’s Foreign Direct Investment (FDI). Through my research, we see that India’s foreign corporate tax rate affects its FDI negatively. The time period we will be looking at will be from 1997-2013, due to the limited data available. Furthermore, I will explore some policy improvements which may increase FDI in India.

Foreign direct investment (“FDI”) in India is regulated under the Foreign Exchange Management Act 1999 (“FEMA”). The Department of Industrial Policy and Promotion (“DIPP”), Ministry of Commerce and Industry, Government of India makes policy pronouncements on FDI through Press Notes and Press Releases which are notified by the Reserve Bank of India (“RBI”) as amendments to Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000.

Many writers have tried to figure out if there is a direct link between Foreign direct investment (FDI) and economic growth of an economy in terms of Gross domestic product (GDP) but a reliable procedure hasn’t been found yet.

A foreign direct investment has become a striking measure of economic development in both developed and developing countries. FDI and FII thus have become instruments of international economic integration and incentive. Fast growing economies like China, Singapore etc., have registered unbelievable growth at onset of FDI. Though US captures most of the FDI inflows, developing countries still account for significant growth of FDI and rise in FII. FDI not only gives access to foreign capital but also provides domestic countries with cutting edge technology, desired skill sets, tools of innovation and other harmonious skills. The policies drafted to stimulate the flow of foreign capital in to India provided much needed an external (or) internal for India to emerge as an attractive destination for foreign investors. External factors such as global economic cues, FDI & FII, Exchange rate and Internal factors such as demand and supply, market cap, EPS generally drive and dictates the Indian stock market. The current paper makes an attempt to study the relationship and impact of FDI & FII on Indian stock market using statistical measures namely correlation coefficient and multi regression during the study period from 2005 to 2014. Sensex and Nifty were considered as the representative of stock market as they are the most popular Indian stock market indices. It concludes that Flow of FDIs and FIIs in India determines the trend of Indian stock market during the study

Economists believe that Foreign Direct Investments is an essential part of economic evolution in every country. There are many academic papers that attempt to assess FDI aspects. Despite many researchers have tried to give an accurate explanation to FDI, there is no comprehensively approved theory. FDI motivations have been mainly researched by John Dunning, Stephen Hymer, Raymond Vernon, etc.

Foreign Direct Investment is the investment of a country domestic assets into foreign structures, equipment and organizations, but does not include investment into stock markets. Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (direct investor) in an entity resident in an economy other than that of the investor (direct investment enterprise). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated.

Introduction. Vitality will be particular case An vital inputs to the investment improvement of whatever nation. On account of the Creating countries, for example, such that India, the vitality division expects An discriminating criticalness in perspective of the at any point expanding vitality necessities requiring tremendous ventures with help them.

In the face of the global economic slowdown (and recession in a number of major economies), tighter credit conditions and falling corporate profits, many companies have announced plans to curtail production, lay off workers and cut capital expenditure, all of which has implications for FDI .However, the impact of the crisis varies widely, depending on region and country, with consequences for the geographic pattern of FDI flows .