A diagnostic study of impact of fdi on trade and industrialization in Nepal

Abstract

Foreign direct investment (FDI) is an effective instrument for promoting sustainable economic development. FDI can serve as a principal component to domestic investment and capacity building for the growth and development of the developing as well least developed countries. FDI brings a package of resources such as capital, technology, skills, management know how and marketing capabilities. This present paper has been conducted to examine the diagnostic study of impact of foreign direct investment (FDI) on trade and industrialization in Neal. There has been significant contribution of FDI and trade on economic development of Nepal. Measuring the impact of FDI on trade and industrialization, simple regression model has been applied. Since, FDI flow has been recorded after 1990/91; the impact of FDI has been analyzed over the period of 1990/91-2018/19. This study has found a positive impact of FDI and trade on GDP, trade tax, tax revenue, employment, import trade, total trade and export trade. The overall results show that there has been moderate impact of FDI on macroeconomic variables.