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Does Good Governance Matter FDI Inflow? Evidence from India

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DOI: 10.4236/me.2019.106101    130 Downloads   192 Views


Is there a relationship between governance and Foreign Direct Investment (FDI) adept in a presumed country? What is the importance of institutional set-up or governance in stimulating growth in a developing country? To answer this query, this study explores the distinction of good governance for FDI inflows in India for the time period of 14 years, i.e. from 1996 to 2012 by employing multiple regression models. Firstly, variance inflation factor (VIF) test shows that there is no perfect multicollinearity. Secondly, the empirical results evinced that institutional factors matter for huge FDI attraction in India. The paper evidence that India attract more FDI due to good governance, therefore it is acclaimed that government of India should take auxiliary steps to improve governance which can tempt more foreign investors and can help attain full employment, boost growth and can nurture per capita income.

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Khan, H. , Khan, I. , Jan, M. , Jandan, A. and Khan, S. (2019) Does Good Governance Matter FDI Inflow? Evidence from India. Modern Economy, 10, 1526-1538. doi: 10.4236/me.2019.106101.

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