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Title: Impact of Private Foreign Capital Inflows on Economic Growth in India: An Empirical Analysis
Authors: Sethi, N
Sucharita, S
Keywords: Capital Flows
Financial crisis
capital account liberalization
emerging markets and financial integration
Issue Date: Aug-2009
Citation: Singapore Economic Review Conference (SERC) 2009”, Singapore Economic Review and National University Singapore, Swissotel-The Stamford, Singapore, held from 6th-8th August, 2009
Abstract: The present study attempts to explain the effects of private foreign capital inflows (FINV) on some macroeconomic variables in India using the time series data between April 1995 to Dec. 2007. The study examines the impact of international capital flows on economic growth. The study also analyses trends and composition capital inflows into India. The Cointegration test confirms the presence of long-run equilibrium relationships between a few pair of variables like private capital inflows (FINV) and economic growth (IIP as proxy of GDP) and FINV and Exchange Rate (EXR). The Granger causality test shows unidirectional causality from FINV to Exchange Rate (EXR) and bi-directional causality from FINV and growth (IIP). Finally study found that Foreign Direct Investment (FDI) is positively affecting the economic growth, while Foreign Institutional Investment (FII) is negatively affecting the growth. The empirical analysis shows that FDI plays unambiguous role in contributing to economic growth. It concludes that capital inflows have not contributed much towards industrial production or economic growth. There are two reasons for this, one the amount of capital inflows to the country has not been enough and the amount of capital that does flow in, is not utilized to its full potential
Description: Copyright belongs to proceeding of the publisher
Appears in Collections:Conference Papers

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