The Role Of Indian Fdi On Nepalese Economic Growth

With recent technology advancements and globalization process, there exists more cases of domestic capital invested into foreign domains to exploit foreign markets. This paper aims to study the effect of U.S. direct investment abroad, and foreign direct investment (FDI) in the U.S. on the unemployment rate in U.S. A dummy variable will be tailored to explain the impact of the 2008 financial crisis and its spill-over effect in to 2009, in relation to the overall quarterly time series data from 1994 to 2014. Multiple linear regression results confirm while both foreign direct investments and U.S. investments abroad are critical components in the model, FDI is comparatively more important determining unemployment rate.

FDI grew quickly in the 1990’s. The U.S is the top destination of FDI and China and Brazil are in top five. The reasons for the increased activity were the opening of markets due to trade liberalisation and deregulation, pressure of competition brought about globalisation and technological changes, the importance of size as a factor in creating economies of scale and the desire to strengthen market position.

The FDI creates capacity in the form of physical and logical infrastructure. The FPI, which is for short span of time, creates liquidity in the market and it is being invested in domestic financial markets such as capital market, money market, foreign exchange market etc. In this strong inclusive growth environment, the Indian economy is experiencing a robust development during 2006-07. The real Indian GDP growth has gone up to 9.3 percent in the first quarter of 2007-2008 from the level of 9.0 percent in 2005-06, advanced by double-digit growth in both the service and industrial sectors (Malayendu Saha 2009). The increasing trend in Indian economy has made India among one of the fastest growing states in the world.

The correlation between foreign direct investment (FDI) and economic growth is well documented see (Borensztein, De Gregorio, J-W. Lee 98). Even though there has been an extensive amount of research, which includes both FDI and economic growth, there still seems to be a substantial divide between the results; which are concluded within these papers. To begin in this research paper we will define foreign direct

The stationary property of time series is tested by using Phillips-Perron (PP) unit root tests as PP-test has greater power than the Augmented Dickey and Fuller (ADF) test (Banerjee et al 1993). Another advantage of the PP tests over the ADF test is that the PP tests are robust to general forms of heteroskedasticity in the error term ut (Phillips and Perron 1988). Besides, unlike the ADF technique, the user does not have to specify a lag length for the test regression in the PP technique (Debnath, A., and N. Roy 2012). The result of unit root tests on the natural logarithms of per capita GDP and per capita electricity consumption is shown in

2. The model of economic growth based on production functions (the Welfens/Jasinski model and its modifications). To show how FDI influence economic growth of a particular country a model proposed by P.Welfens and P.Jasinski is used. It is based on traditional production functions.

The factors involved in process of economic growth of nations have transformed overtime, from savings to trade, foreign investment and human capital base of the country. With opening up of the economies and the formation of multiple agreements among the countries, trade and FDI have become the major medium of accord among the economies. There has been surge in FDI inflows ever since the countries adopted liberalisation policies across the globe. The countries have been looking for policies to attract more FDI by boosting investment climate in their countries, to finance their process of growth and development.

The aim of this study is to assess the success in attracting FDI of Vietnam by answering two first research questions: (1) What are the factors affecting the FDI inflows to Vietnam? (2) Is there any difference between potential FDI inflows calculated by Gravity model and actual figures? In an attempt to find out the answers for those questions, the methods for data analysis will be clarified in this chapter.

India’s primary sector has helped boost the economy. The employment level, due to the Five Year plan, has increased in the sectors of forestry, fishing and logging. The uncertainty of climatic conditions, has forced a strong shift into the secondary and tertiary sectors. The manufacturing output climbed to 9.3% in the previous quarter while finance and insurance services growth has had an increase to 9.7%. The growth of the financial sector has been a direct result of the reforms in place that boomed the stock market, assisting large firms finance their expansions.

This paper is examines the causal relationships between gross domestic product (GDP) and exports in Pakistan by using time series data for the period between 1980 and 2000. Time series evidence shows that increase in exports has a significant effect on the economic growth of Pakistan in the previous two decades. This paper uses cointegration to check the causal relationship between export growth and economic growth in Pakistan. Granger Causality test shows that there is uni-directional causality between exports and economics growth in which running from exports to economic growth, it shows that there is long term relationship between exports and the economic growth. ADF and

In developing countries FDI is seen as a useful source of funds. LDC’s look upon FDI as a source to bridge their demand supply gap of funds. It represents an important source of non-debt inflow that often brings along with it new technology and management

To study the changes since 1980s till 2009 and their impact on economic growth, FDI and

In spite of statistically significant Granger-causality between FDI and Exports, this test alone is not that strong to fully establish dependence of one variable on other. It, in fact, only establishes that explanatory variable leads the dependent variables- a necessary (but not sufficient) condition for an explanatory variable. For unbiased estimation of regression parameters another necessary condition is that the explanatory and dependent variables should have mutual cointegration. Granger-causality and cointegration together are thought to be

This study is focused on the two aspects: market-seeking FDI and resource-seeking FDI. These two aspects which influence the determination of FDI can be denominated by some numerical variables. In terms of market-seeking, GDP and the rate of inflation can be used to measure the market size and market growth respectively. The sum of exports and imports of goods and services indicates the openness of an economy, which also means the availability of access to regional and global markets. On the other hand, raw materials and human capital are the key elements for those resource-seeking enterprises. Thus, labour cost per worker in logs denotes human capital. With all the variables above, a specific regression model are able to build to investigate the research question.

This paper is fully based on secondary information. Content Analysis Method, which is commonly known as the review of the previous literature, has been followed in the preparation of this article. Apart from that secondary information have been collected from the statistics Department of Bangladesh Bank, Investment Handbook of Bangladesh Board of Investment, Bangladesh Economic Review 2006 and Bangladesh Bank’s Annual Report 2006. Some information has also been collected from the daily newspapers and Internet sources. Used data has been presented through tabular and graphical analysis.