Author(s)

Hayat Khan^1*, Itbar Khan², M. Shabir Jan³, Arif Hussain Jandan⁴, Sher Khan⁵

¹Business School of Guangxi University, Nanning, China.
²Department of Management Sciences, National University of Modern Languages, Islamabad, Pakistan.
³Department of Economics, Bacha Khan University, Charsadda, Pakistan.
⁴Department of Economics, Sindh Agriculture University, Sindh, Pakistan.
⁵School of Economics, Henan University, Kaifeng, China.

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.

Governance Determinants, Foreign Direct Investment, Regression Analysis, Pearson Correlation

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.