TRENDS AND PATTERNS OF FLOW OF FDI IN DEVELOPED COUNTRIES AND DEVELOPING COUNTRIES: A COMPARISON

Abstract

Foreign direct investment (FDI) in India has played an important role in the development of the Indian economy. It has in lot of ways facilitated India to achieve a certain degree of financial stability, growth and development. The objective of the paper is to analyse the trends of Inflows during 1991-2011(study period) in India and to know about the global scenario and to examine the relationship of liberalised regime pursued by the countries with the level of FDI stock. To empirically test this relationship, Regression analysis was carried out between FDI Restrictiveness Index (FDI Index) and level of FDI stock and the results reveal a significant relationship between this index and the level of FDI stock. This index measures statutory restriction, all discriminatory measures affecting foreign investors, including market, access restrictions and departures from national treatment and gives scores to the respective countries in this endeavour. This study will give more insights about the policy framework to be followed by the countries to increase the flow of FDI inflows especially in the developing countries as for them this is the engine for economic growth.