Is Democracy Necessary for Foreign Direct Investment Inflows in India?

Abstract

India has developed a positive attitude towards the foreign direct investment (FDI) inflows during the last five years and made several changes in the market conditions, enhanced civil rights and liberties to attract more FDI inflows. This study examines the impact of democracy on FDI inflows in India by employing an autoregressive distributed lag (ARDL) model. For the said purpose, the study uses the annual data from 1980–2017. The findings demonstrate that the democratic setup does not induce FDI inflows in the short run, but there is a positive and significant impact of democracy in the long run. Furthermore, it confirms that gross national income per capita; trade openness, political rights, and civil liberties are significant and positive determinants of FDI inflows in India. Based on findings, this study recommends that India nurture democratic values, property rights security, and values of civil liberty & freedom to appeal for more foreign investment inflows into India progressively. JEL Codes: D73, C22, F14

Sustainable Economic Growth and FDI Inflow: A Comparative Panel Econometric Analysis of Low-Income and Middle-Income Nations

“…The past literature provides a large number of evidence in support of a positive and highly significant relationship between trade openness and "FDI inflow" in different regions of the world using time series, as well using aggregate panels of different economies such as in [11], which uses a comparative panel of developed and developing countries; [29] in the case of post-communist economies; [7] in the case of Pakistan; [10] for a panel of selected ASEAN countries; [18] in the case of a selected panel from Caribbean countries; [30] in the case of India; [31] in the case of India again; and, finally [32] in the case of some countries from the MENA region. However, some important studies still provided the insignificant yet positive impact of trade openness on "FDI inflow" for individual countries as well as on some panel studies such as [12] in the case of Africa; [33] for a panel of emerging markets; [34] in the case of developing and emerging countries; [35] in the case of Saudi Arabia; and [36] in the case of some of the MENA countries.…”

Do Better Institutional Arrangements Lead to Environmental Sustainability: Evidence from India

“…The literature has demonstrated the relationship between institutions and environmental sustainability and gained various researchers' attention. Different economists have used different institutional quality indicators (for example, political stability, democracy, the rule of law, political globalization, economic freedom, and control of corruption) in the case of the SAARC, G-7, EU, G20, BRICS, and OECD countries [5,6]. They found a link between institutions and environmental sustainability and established that improved institutional quality leads to better environmental eminence.…”