Incentives to Attract Foreign Direct Investment in Emerging Economies

Abstract

The study delves into a diagnostic check for macroeconomic factors that may cause and explain outward FDI flows to India as a representative of the emerging economies. The seventeen top investing economies to India across the period from 2008-14 reveal that overall FDI outflows, inflation, exchange rate and growth of the economy affect FDI outflows to India in the long run where only exchange rate has a causal effect. Also, the above-mentioned variables except growth along with the size of the economy has significant effect on the extent of FDI flows to India from the economies considered for the study.