( ISSN 2277 - 9809 (online) ISSN 2348 - 9359 (Print) ) New DOI : 10.32804/IRJMSH

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DOES INWARD FDI CROWD OUT DOEMSTIC INVESTMENT: CASE OF INDIA

    1 Author(s):  LAXMI NARAYAN

Vol -  2, Issue- 2 ,         Page(s) : 127 - 132  (2011 ) DOI : https://doi.org/10.32804/IRJMSH

Abstract

The paper analysed the impact of inward FDI on the domestic investment in the country. There are three different viewpoints in the effect of crowding-out or crowding-in of the inflow FDI on domestic investment. The FDI inflows may induce domestic firms to invest and crowd in domestic investment, it may crowd out domestic investment to its impact may be neutral. The literature review shows that the FDI in the host country can be mixed depending on the conditions of market and sectoral distribution of FDI. Using multiple regression analysis we estimated investment equation to ascertain the impact of FDI on domestic investment. We found that though FDI/GDP ratio has increased significantly but its impact on domestic investment has not been negative, indicating its crowding out.

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