DETERMINANTS OF FDI – A COINTEGRATION APPROACH
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Abstract
India has been encouraging the FDI (Foreign direct investment) not only for its role in the technological upgradation of a country but also for its contribution in the economic development in the hosting country. Inward Foreign Direct Investment (FDI) has become an essential component of economic growth particularly for developing countries. Mainly FDI inflow is from the developed countries which also give the technological and administrative shift to the developing countries. There are many macroeconomics factors which may boost the inflow of FDI in India. In this paper I have tried to find out the relation between the macroeconomic factors and the FDI inflow in India by using some econometric tests – Unit Root Test, Johanson co integrated test, VECM (vector error correction model).
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