Impact of FDI Inflows on Export and Growth of an Indian Economy

Abstract

FDI may be reflected as a resource for developing countries to get capital inflows, access to foreign technology, management skills and marketing networks. India is the world’s highest rising economies and remains a top market for Foreign Direct Investments (FDI). In a globalizing world, export success can serve as much for the competitiveness of a country’s industry and lead to faster growth. India is the most primary economies globally for foreign investment. It allows FDI of up to 100 percent of the equity shareholding in most sectors under the automatic route. The inflow of FDI into India is projected as able to increase productivity which will ultimately have an impact on the increase in national income in the form of the Gross Domestic Product (GDP) as well as in the form of increased exports. Exports support a country to increase its foreign exchange reserves, and build a strong financial position. FDI is seen as a potent tool of export promotion in the domestic country. This paper examines the most important benefits connected with the inflow of FDI as Export Performance, and GDP Growth. To study the dynamics of co-integration between FDI Inflow, GDP growth, and Export Performance, evidence is taken from country-specific level like Indian Economy where the period of study is from 2009-10 to2018-19. Hence, the paper studies the economic scenario of India for its FDI inflows, GDP growth rate, and its export performance. This paper attempt to analyze a positive correlation between FDI Inflow, GDP growth, and Export Performance by framing Simple Regression and Multiple Regression Models erected on the hypotheses formulated and validating the results of the models based on ANOVA and Durbin-Watson test.