Examine the impact of economic reforms on growth rate of gdp and fdi
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Explanation:
The objective of the present study was to examine the impact of new economic reforms of 1991 on Indian economy in general and GDP growth rate in particular. ... The regression analysis confirmed that the GDP growth of India is significantly affected by imports and surprisingly FDI inflows were found to be insignificant
Summary Booming foreign direct investment (FDI) in post-reform India is widely believed to promote economic growth. We assess this proposition by subjecting industry-specific FDI and output data to Granger causality tests within a panel cointegration framework. It turns out that the growth effects of FDI vary widely across sectors. FDI stocks and output are mutually reinforcing in the manufacturing sector, whereas any causal relationship is absent in the primary sector. Most strikingly, we find only transitory effects of FDI on output in the services sector. However, FDI in the services sector appears to have promoted growth in the manufacturing sector through cross-sector spillovers.