ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Institutional Quality and Foreign Direct Investment in India

An Econometric Analysis

Foreign direct investments tend to gravitate to nations with good governance. The quality of governance is largely affected by institutional factors such as control of corruption, government effectiveness, political stability, regulatory quality, rule of law, voice and accountability. This study contributes to the existing literature on foreign direct investments by testing the impact of six parameters of institutional quality on investment inflows into India. 

Foreign direct investment (FDI) is an important driver of economic growth as evident from the empirical studies conducted across the world. The magnitude of the impact of FDI on growth may differ depending upon the different country classifications such as developed, developing or least developed countries. Some studies even find insignificant or negative relations between the two. However, the fact remains that over the last five decades, FDI has pole positioned itself as an important factor of economic recovery and growth on the world stage. Institutions are man-made structures, which restrain human behaviour within well-defined rules and laid-out norms.

The quality of local institutions in the recipient economy is considered to be an important factor for inward FDI. These institutions are primarily government, semi-government or autonomous bodies/forums, etc. The formal institutions have a well-defined character based on laws and rules in comparison to the informal institutions, which derive their power based on social norms or conventions.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Or

To gain instant access to this article (download).


Pay
INR 236

(Readers in India)


Pay
$ 12

(Readers outside India)

Published On : 20th Jan, 2024

Support Us

Your Support will ensure EPW’s financial viability and sustainability.

The EPW produces independent and public-spirited scholarship and analyses of contemporary affairs every week. EPW is one of the few publications that keep alive the spirit of intellectual inquiry in the Indian media.

Often described as a publication with a “social conscience,” EPW has never shied away from taking strong editorial positions. Our publication is free from political pressure, or commercial interests. Our editorial independence is our pride.

We rely on your support to continue the endeavour of highlighting the challenges faced by the disadvantaged, writings from the margins, and scholarship on the most pertinent issues that concern contemporary Indian society.

Every contribution is valuable for our future.