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Interim Report Group-15

Interim Report Group-15

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Published by Ibrahim Abe

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Published by: Ibrahim Abe on Feb 18, 2012
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FDI & ITS IMPACTS ON ECONOMIC GROWTH: AN EMPIRICAL STUDY ON INDIA Group-15 Mohd Ibraheem, Abhishek Sethi, Abhishek Jain

, Deepankar Shri Gyan, Anjul Aggarwal

Introduction After 1990 Economic Liberalisation in India¶s GDP has grown very rapidly. In this paper we attempt to analyse the effect of certain variables that are the determinants of GDP in order to understand effect of FDI on economic growth of the country. We include the four variables in the model Gross Domestic Investment (GDI), Foreign Direct Investment (FDI), Human Capital (HC), Labour Force (LF) on Gross Domestic Product (GDP). FDI is defined as: y IMF defines FDI as ³The acquisition of at least ten per cent of the ordinary shares or voting power in a public or private enterprise by non-resident investors. Direct investment involves a lasting interest in the management of an enterprise and includes reinvestment of profits´.

Variable According to Keshava (2008) to assess the effect of FDI on growth, uses four variables of FDI, Gross Domestic Investment (GDI), Foreign Direct Investment (FDI), Human Capital (HC), and Labour Force (LF) to study the effect on Gross Domestic Product (GDP). The GDP is taken as dependent variable and Gross Domestic Investment (GDI), Foreign Direct Investment (FDI), Human Capital (HC), and Labour Force (LF) are taken as independent variable. Data Source For this study we are going to use secondary source of data from various databases like the publications of Government of India, Reserve Bank of India, Ministry of Industry and Commerce, World Bank, and IMF, UNCTAD, Centre for Monitoring Indian Economy (CMIE) other than books, Journals and Periodicals. The reference period of this study relates from 2000 to 2010.

Second Singapore International Conference on Finance 2008. will be used to study the dependency of these independent factors on GDP. are the respective elasticity coefficient of the concerned variables as usual. Available at SSRN: http://ssrn. International Journal of Business & Management. G.com/abstract=1089964 Agrawal.Methodology Relevant statistical techniques. & Khan. 6(10). The Effect of FDI on India and Chinese Economy: A Comparative Analysis. not accounted by all the four factors listed.e. especially regression. S. R. (2011). (2008). 71-79. To find out the relationship between the factors and GDP as follow Y= A + X1 Where Y = Gross Domestic Product in yearµt¶ X1 = Gross Domestic Investment in year¶t-1' X2 = Foreign Direct Investment in yearµt-1' X3 = Human Capital in the yearµt-1' X4 = Labour Force in the year't-1' Further A is the total factor productivity that explains output growth i. Dr. + X2 + X3 + X4 References Keshava. . A. . M. Impact of FDI on GDP: A Comparative Study of China and India.R. This equation is transformed into linear one to facilitate to use of ordinary least square method by taking logarithmic transformation. . .

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