Impact of Foreign Direct Investment on growth

Nikhil Patidar, Sachet Jain

Abstract


This study examines effect of FDI on economic growth in the developing economies. The study uses regression tools to examine why few emerging markets have significantly benefited from Foreign Direct Investment and hence grown at a higher rate while few have been laggards. The study also analyses spillover effects of FDI in pharmaceutical sector of India wherein the effect of FDI on domestic firms has been studied and compared using the productivity measure ROCE. On the basis of regression results and macroeconomic data predications policy recommendations have been made. In this paper, a collective analysis has been done on the effect of FDI on growth of the following countries: India, Vietnam, Brazil, Thailand, Mexico, China and Indonesia. With GDP chosen as the growth parameter, the impact of FDI on growth has been evaluated using regression tools for these countries. Consequently, the reasons for variations in the results of various countries have then been studied and compiled. Then, a study of FDI and spillover effects in the pharmaceutical industry in India has been done. The productivity efficiency of domestic and foreign firms over the years has been plotted and compared to demonstrate the spillover effect. The results obtained are attached in the report.

Keywords


Foreign Direct Investment, Pharmaceutical, FDI, Spillover, Regression

Full Text:

PDF

References


Baharumshah, A., & Thanoon, M. , "Foreign capital flows and economic growth in East Asian countries" China Economic Review,17, 70-83, 2006.

Bezuidenhout, H., "A regional perspective on aid and FDI in Southern Africa" North West University, Potchefstroom, South Africa,147, 2009.

Chadee and Schlichting, "Foreign Direct Investment in the Asia-Pacific Region: Overview of Recent Trends and Patterns" Asia Pacific Journal of Marketing and Logistics,9, 3-15, 1997.

de Mello, L.R., “Foreign Direct Investment in Developing Countries and Growth: A Selective Survey”, Journal of Development Studies, 34, 1-34, 1997.

Hsiao and Shen, “Foreign Direct Investment and Economic Growth: The Importance of Institutions and Urbanization” Economic Development and Cultural Change, 51, 83-896, 2003.

Jenson, Nathan M. , “Democratic Governance and Multinational Corporations: Political Regimes and inflows of Foreign Direct investment” International Organization, 57, 587-616, 2003.

Ram and Zhang "Foreign Direct Investment and Economic Growth: Evidence form Cross-Country Data for the 1990s" Economic Development and Cultural Change, 51, 205-215, 2002.

Zhang and K.H., "Does Foreign Direct Investment Promote Economic Growth? Evidence form East Asia and Latin America", Contemporary Economic Policy, 19, 175-185, 2001.

Ahluwalia M.S., et al ed. Macroeconomics and Monetary Policy: Issues for a Reforming Economy, Oxford University Press, pp. 146-161, 2002


Refbacks

  • There are currently no refbacks.


Copyright (c) 2016 Nikhil Patidar, Sachet Jain

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.