TITLE:
Do Macroeconomic Indicators Stimulate FDI Inflows in India?
AUTHORS:
M. C. Minimol
KEYWORDS:
Foreign Direct Investment, Sensex, Nifty, Gross Domestic Product
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.7,
December
12,
2017
ABSTRACT: The current study mainly attempts to find out
whether macroeconomic indicators actually stimulate the inflow of FDI into India. The study also attempted
to check whether there is any long run or short run relationship between the
macroeconomic indicators and FDI inflows into the country using regression
analysis, Cointegration test, Granger causality and Vector error correction
model. The results show that the explanatory variables captured in the model
well explained the variations in FDI Inflows. However, not all the explanatory
variables considered in the model are statistically significant in explaining
the behavior of FDI. Unrestricted Cointegration Trace statistic and Max-Eigen
statistics supports the existence of cointegrating relationship among the
variables. The study also shows that SENSEX and NIFTY do granger cause FDI in
the long run while, FDI does not granger cause neither of the two. S Vector
Error Correction Model supports the absence of short-run relationship among the
macroeconomic indicators and FDI inflows in India.