The Impact Of Foreign Direct Investments On Developing Countries

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There is a general consensus that federal direct investments are thought to bring a considerate amount of economic well-being for developing countries. It is intriguing to observe the true effects of Federal direct investments on developing countries. While FDI has become an outcome of a more globalized world, some countries do not see the same benefits of this phenomenon as other countries. One country that has seen a heavy influx of foreign direct investment is India. This paper briefly addresses both the positive effects of FDI on India and looks at the growth of GDP in India’s economy. It concludes that FDI has transformed India’s economy and will continue to transform it. From this research, it will give a deeper
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Empirical research shows us mixed result on this. However, we can see the effect of FDI more closely and understand how it operates in a developing country like India, where FDI has surged. FDI has increased so much because many economist say it has become more liberalized and the market potential makes it a strong competitor in investment.
This paper will look in depth at the effect of growth from FDI in India. It will first focus on the theoretical and empirical research regarding FDI and its effect on growth. It will discuss the literature that signifies that federal direct investment did help to grow India’s economy and explore why this is happening. It will mainly explore the federal direct investment outcome on growth and will use statistics on India’s economy to further understand this and prove that FDI is very important in order to help grow an economy. It will take a look at linear regression models that show a positive relationship between FDI and India’s GDP.

Drawing from the endogenous growth model, I theorize that the effects of FDI on economic growth are dependent on the existing economic, political, social, and cultural conditions in India. According to the World Investment Report that was published in 2010 India emerges as the fifth largest recipient of foreign direct investment across the globe and second largest among all other developing countries. The huge market
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