Abstract
The present study empirically investigates the long-run causal relationship between foreign capital and economic development in India by using the annual time-series data from 1990–1991 to 2013–2014. The study uses some selected macroeconomic variables such as per capita government expenditure on education (PcGEE, as an indicator of economic development), gross domestic product (GDP, as an indicator of economic growth), gross capital formation (GCF, as an indicator of domestic investment), official development assistance (ODA, as an indicator of foreign official inflows) and foreign direct investment (FDI, as an indicator of foreign private investment) for its empirical analysis. By using the cointegration test and the vector vector-error correction model (VECM) technique, this study finds that in the long run, domestic investment has shown a significant and positive impact on economic development, whereas, ODA, FDI and GDP have shown a significant negative impact on it. It concludes that domestic investment, foreign capital along with economic growth have a significant impact on economic development in India in long run. It suggests that the national developmental policy of India should focus on the productive utilization of both domestic and foreign capital along with it should give emphasis on effective transformation of growth benefits towards development process.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
