CAUSAL FACTOR ANALYSIS OF FOREIGN DIRECT INVESTMENT INFLOWS INTO INDIA: AN ECONOMETRIC ANALYSIS

This paper basically highlights the determinant factors of Foreign Direct Investment and how these factors are affecting Foreign Direct Investment which is the most important factors of economic growth. The study intends to examine the relationship between Foreign Direct Investment inflows and its selected determinants are. The study is based on the secondary time series data collected for thirty five years ranging from 1980-81 to 2014-15. The collected data was analysed by using linear and Log -Linear regression analysis. The results revealed that Foreign Direct Investment inflows exhibited a mixed pattern. A significant relationship was found between MSIZE, EXP as % GDP, FOREX, and EXTDEBT and these variables were positively related. IIP, REER, and TRADEOPEN were found statistically significant and however its coefficient was bearing negative sign. Equations were formulated using the regression analysis and they were found to be of good fit to predict the Foreign Direct Investment inflows. Appropriate measures should be taken by the policy makers to improve these variables under study which will result in increased foreign capital inflow in the country.