HOST COUNTRY’S DETERMINANTS TO ATTRACT FDI INFLOWS - AN STATISTICAL ANALYSIS OF INDIA AND ITS MACROECONOMIC ENVIRONMENTAL FACTORS

Abstract

From the last few decades, the Government of India has been emphatically trampling on the role of various determinants that attract the sizeable quantity of foreign Direct Investment. Both the policymakers and Indian governments of centers and states are somehow successful in attracting FDI inflows and highlighting the growth of FDI inflows. FDI inflows can be a measurement instrument that also measures how many other countries want to invest in an Indian economy. However, the ongoing analysis in this paper determines various determinants under the heads of four macro-environments namely Economic Environment, Political Environment, Social Environment and Geographical Environment of India. There are few variables are taken under each head and applying linear regression method to know the significant association of variables with FDI Inflows. After that, the significant variables are taken for further Co integration by implying Johanson Co integration Technique and VECM. It has been found that GDP, Trade, Inflation, Corruption, Political stability, GNI per capita, and Natural Resources from Economic, Political, and Social and Geographical environments have a positive association with the FDI inflows.