The Role of FDI in Accelerating India’s Economic Development: A Macroeconomic Perspective

Authors: Sushma Karnati

Country: India

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Abstract: Foreign direct investment (FDI) has been extensively studied as a significant driver of economic growth, particularly in transitioning economies. In the Indian context, while FDI inflows have increased substantially since the economic liberalization of the 1990s, their impact remains relatively limited when measured as a percentage of GDP or total investment. This stands in sharp contrast to the transformative role FDI has played in the rapid development of other Asian economies like China and ASEAN nations, where the FDI-export model has been crucial to their growth trajectories. India's comparatively lower FDI absorption stems from a complex interplay of domestic and international factors. The academic discourse presents divergent views on FDI's role: proponents highlight its benefits in enhancing production capacity, operational efficiency, and managerial capabilities, while critics caution against potential negative consequences, viewing it as a potential vehicle for economic exploitation in developing nations. This dichotomy necessitates a thorough examination of FDI's actual impact on India's economic expansion to inform balanced policy decisions.

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Paper Id: 232502

Published On: 2017-07-07

Published In: Volume 5, Issue 4, July-August 2017

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