<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>India’s FDI situation is presently seeing a steady move with liberalized reforms over the recent couple of years and an alluring investment atmosphere having a beneficial outcome of the inflows. The main purpose of this study is to determine the nexus between macroeconomic variables and Foreign Direct Investment inflows in India from 1980 to 2016, applying the Autoregressive Distributed Lag (ARDL) testing approach to co-integration and the Toda Yamamoto Granger Causality test to draw inferences. The empirical results reveal a long-run association between Gross Domestic Product and Foreign Direct Investment Inflows. The findings also demonstrate that the causality test validates the causal relationship between foreign direct investment and all economic variables under study, except the Exchange rate and Consumer price index. However, the Toda Yamamoto test divulges bi-directional causality between Gross Domestic Product and Foreign Direct Investment Inflows. Policy makers are essential to pushing the reform agenda in the local market to pull more FDI into the Indian economy.</p>
</abstract>

India’s FDI situation is presently seeing a steady move with liberalized reforms over the recent couple of years and an alluring investment atmosphere having a beneficial outcome of the inflows. The main purpose of this study is to determine the nexus between macroeconomic variables and Foreign Direct Investment inflows in India from 1980 to 2016, applying the Autoregressive Distributed Lag (ARDL) testing approach to co-integration and the Toda Yamamoto Granger Causality test to draw inferences. The empirical results reveal a long-run association between Gross Domestic Product and Foreign Direct Investment Inflows. The findings also demonstrate that the causality test validates the causal relationship between foreign direct investment and all economic variables under study, except the Exchange rate and Consumer price index. However, the Toda Yamamoto test divulges bi-directional causality between Gross Domestic Product and Foreign Direct Investment Inflows. Policy makers are essential to pushing the reform agenda in the local market to pull more FDI into the Indian economy.

Nexus between Macro Economic Variables and Foreign Direct Investment (FDI) Inflows in India: Evidence from Time Series Analysis

Zagreb International Review of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

India’s FDI situation is presently seeing a steady move with liberalized reforms over the recent couple of years and an alluring investment atmosphere having a...

Nexus between Macro Economic Variables and Foreign Direct Investment (FDI) Inflows in India: Evidence from Time Series Analysis

Published Online: Jun 09, 2023

Page range: 55 - 75

DOI: https://doi.org/10.2478/zireb-2023-0003

Keywords
FDI Inflows, Macroeconomic factors, ARDL, Granger causality, India

© 2023 Ishfaq Hamid, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Nexus between Macro Economic Variables and Foreign Direct Investment (FDI) Inflows in India: Evidence from Time Series Analysis

Published Online: Jun 09, 2023

Page range: 55 - 75

DOI: https://doi.org/10.2478/zireb-2023-0003

KeywordsFDI Inflows, Macroeconomic factors, ARDL, Granger causality, India

© 2023 Ishfaq Hamid, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
FDI Inflows, Macroeconomic factors, ARDL, Granger causality, India