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Economies 2017, 5(2), 20; doi:10.3390/economies5020020

Does FDI Really Matter to Economic Growth in India?

1
Global Strategy Research Center, Korea Trade-Investment Promotion Agency, Seoul 06792, Korea
2
Department of Economics, University of Alaska Fairbanks, Fairbanks, AK 99775, USA
*
Author to whom correspondence should be addressed.
Academic Editor: Eric Rougier
Received: 9 March 2017 / Revised: 1 June 2017 / Accepted: 2 June 2017 / Published: 12 June 2017
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
View Full-Text   |   Download PDF [420 KB, uploaded 12 June 2017]   |  

Abstract

The main contribution of this article is to examine the productivity spillover effects from India’s inward foreign direct investment (FDI), controlling for trade, in the framework of the cointegrated vector autoregression (CVAR). For this purpose, using the Solow residual approach the aggregate total factor productivity (TFP) in India is estimated to measure FDI-induced spillovers. The results show that the inflow of FDI to India indeed improves TFP growth through positive spillover effects. We also find that trade appears to have a detrimental effect on TFP growth in India. View Full-Text
Keywords: cointegrated VAR; FDI; India; total factor productivity cointegrated VAR; FDI; India; total factor productivity
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Choi, Y.J.; Baek, J. Does FDI Really Matter to Economic Growth in India? Economies 2017, 5, 20.

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