Influence of GDP Growth Rate on FDI Inflows in the Post-Liberalized Indian Economy

Abstract

Empirical studies uphold GDP growth rate as one of the determinant factors of FDI inflows. United Nations Conference on Trade and Development (UNCTAD) in its World Investment Report 2002 and 2012 identified Real GDP growth and GDP per capita of the host country as crucial factors that attract inward FDI. It is evident that the developed economies having high GDP figures receive the major part of world FDI flows. It is also observed that the countries where the growth rate is comparatively high enjoy good flows of inward FDI. India experienced a smart growth of GDP during the post-liberalized period but the growth has not found any consistency so far. The present study is intended to find whether the sluggish growth trend of Indian economy in the present decade influences the country’s inward FDI flows negatively or not. The study finally finds that the GDP growth rate alone fails to determine the FDI inflows in India in the post-liberalized period