IMPACT OF FOREIGN DIRECT INVESTMENT DETERMINANTS ON ECONOMIC GROWTH

Abstract

This research is based on the impact of foreign direct investments on India's economic growth. Foreign direct investment decisions are influenced by several factors. It includes the country's political stability, exchange rates, foreign reserves, investment policies, GDP and regulations, economic stability, investment policies, inflation rate, and economic and investment stability. Additionally, foreign direct investments support increased trade and the provision of financial help. Foreign direct investment has helped the Indian economy's balance of payments issues. This paper's main objective is to analyse how foreign direct investment affects the growth of the Indian economy. The Gross Domestic Product (GDP), Population, Inflation, Foreign Exchange Rate, Trade, and Net Foreign Direct Investment Inflows are used as the study's variables. The influence of foreign direct investments on the Indian economy is examined using the Multiple regression method. The analysis is based on secondary data gathered from 1991 to 2022 from the various reports of UNCTAD and fact sheets of World Investment. The empirical findings indicate that foreign direct investments are important for the expansion of the Indian economy and that there is a strong correlation between FDI and GDP.