Impact of FDI on Economic Indicators of India

Transcription

1 Impac of on Economic Indicaors of India Mankaj Meha Assisan Professor, PG Deparmen of Commerce, Mulani Mal Modi College Paiala Absrac:- Foreign Direc Invesmen amongs oher expedien renders capial inflowsanicipaed o rouse economic proliferaion. in India has able o culminae an explici inensiy of fiscal invariance; emergence and evoluion o suppor and compee in he orbicular economy. Foreign Direc Invesmen is one and only sellar effecuaion of enamoring Inernaional Economic Inegraion in any economy. I serves as anassociaion beween arbirage and redeeming. Foreign speculaion fluxes addiion he scany domicile arbirage in evolving counries predominanly in India. Furher his review endeavors o examine he Oucome of on Paramoun Economic Indicaors in Indian Scenario. Key Words: Foreign Direc Invesmen, Expedien, Capial Influxes, Economic Proliferaion, Economic Inegraion, Arbirage ***** I. INTRODUCTION Invesmen plays an imporan role in acceleraing economic expansion of any economy. Indian economy opened up o he universal world in 99 hrough allowing foreign invesors o inves in India. The foreign invesmens can be channelized eiher in he lised companies share hrough financial markes (called Foreign Insiuional Invesors) or hrough direcly invesmen in capial srucure of he lised/unlised companies in India (called Foreign Direc Invesmen). Foreign Direc Invesmen () plays more imporan role han FIIS in progress of any developing counry especially like India. I conribues significanly o human capial such as managerial skills and research and developmen(r&d). For he invesors, India is being considered as he second mos imporan desinaion afer China for ransnaional corporaions during Alhough boh ypes of invesmens provide an momenum for economic and indusrial expansion, bu now India give more emphasis on aracing as i says for longer period, for is exis policy is no as easy as for FIIs. Availabiliy of highly qualified human resource, huge unapped poenial domesic markes, low- cos manufacuring, makes India a favourable desinaion for foreign invesors. OBJECTIVE To find ou he impac of on leading Economic indicaors in Indian scenario II. LITERATURE REVIEW Mucuk and Demirsel (203) 5 conduced a sudy o find ou he impac of on he unemploymen rae in seven developing counries. The resul disclosed ha, mos of he foreign invesors come o he counry and associae wih a company ha are already exisence, so usually causes an negaive effec on he unemploymen rae in he counry. Laskiene&Pekarskiene (20) 4 conduced a sudy and shown ha has a posiive effec on he invesmen of hos counry s labour produciviy. Bu he growh of produciviy is no he same in differen areas of economic aciviy. Balasubramanyam e al. (996) 2 reveals significan resuls o suppor he assumpion ha is more imporan for economic growh in expor promoing han in imporing subsiuing counries. This saed ha he impac of varies across counries and rade policy can affec he role of in economicgrowh. Alfaro e al. (204) reveal ha plays an imporan role in conribuing o economic growh bu he level of developmen of local financial markes is crucial for hese posiive effecs. Padhi, S. P. (2002) 6 reveals ha inflaion, deb srucure, and exchange rae significanly influence flows in Nigeria. The sudy saed he governmen o pursue pruden fiscal and moneary policies ha will be uplif owards aracing more and enhancing overall domesic produciviy. 706

2 III. ECONOMIC INDICATORS AND I has been a well esablishedfac ha he growh of foreign direc invesmen () escalaes he economic growh of a counry. The impac of on he economic facors-gdp, Currency, Sock Marke, Foreign Exchange Reserves, Ineres Rae, Curren Accoun, Expors, Impors, and Unemploymen Rae has been phenomenal. Marke Size (Gross Domesic Produc): if he marke size (GDP) of a counry is large i will arac more and vice versa. There is posiive correlaion beween GDP and which is mached wih he objecive o achieve higher growh in erms of GDP and. Availabiliy of Human Resources (Wages Paid): Availabiliy of human resources is anoher facor which has influenced on any counry s economy. I is noed here is posiive correlaion beween Wages paid and inflow, i mean if here is % change in wage rae i causes posiive changes in oo. Economic Sabiliy (Defici Balance of Paymen): Balance of Paymen is one of he pull facors of inflow. The economic heory suggesed he negaive elasiciy coefficien beween and Defici in Balance ofposiion. Governmen Policies (Trade Openness): Governmen policies are one of he major facors which deermine he flow of in Counries.Degree of rade openness means raio of oal rade o real GDP of Economy. As he governmen policies are liberal hen here is high probabiliy of inflow of ino he counry. Exchange Raes: Exchange rae can be defined as he admiraion of Indian Rupee in inernaional marke which encourages he foreign invesors firms o obain he specific asses required a cheap raes and earn higher profis. Inflaion: A reliable economy can be defined if he inflaion rae is low. Any changes in inflaion raes of home counry and foreign counry are probably aler he mos favourable invesmen decisions and gives negaive impac on. BSE & NSE index: Financial indexes are consruced o measure price movemens of socks, bonds, T-bills and oher forms of invesmens. Sock marke indexes are mean o capure he overall behaviour of equiy markes. A sock marke index is creaed by selecing a group of socks ha are represenaive of he whole marke or a specified secor or segmen of he marke. An Index is calculaed wih reference o a base period and a base index value. play an imporan role for he movemen of hese indices IV. PROBING THE IMPACT OF ON ECONOMIC INDIACTORS The following Equaions are being formulaed o measure he relaionship beween and oher economic indicaors. Where Economic indicaors are dependen variable and is independenvariable.. GDP = α +β +e () 2. NSE (NIFTY)= α +β +e (2) 3. BSE (SENSEX) = α +β +e (3) 4. FCA = α +β + e (4) Impac of on GDP: Table : Model Summary Model R R Square Adjused R Square Sd. Error of he Esimae.889 a a. Predicors: (Consan), According o Table, manifess he regression model fi summary, he value of R,.889, signifies ha 88.9% of correlaion is presen beween he dependen and independen variables. The value of R 2, 0.79 depics linear regression and furher explains ha 79.% of he variance in he daase when he independen variable in he model affecs he dependen variable, and he adjused value of R 2,.78 depics ha 78.% of variaion is explained by only independen variables ha in acualiy affec he dependen variable. 707

3 Table 2: ANOVA a Model Sum of Squares df Mean Square F Regression b Residual Toal a. Dependen Variable:GDP b. Predicors: (Consan), According o he Table 2, he F-es depics a high valueof along wihdegree of freedom (df), 23, which means here is nolinear relaionship beween any of he wo variables in he model. The p-value () is i.e. less han 0.05, which indicaes ha he regression model is saisically significan and predics he oucomevariable. Table 3: Coefficiens a Model Unsandardized Coefficiens Sandardized Coefficiens B Sd. Error Bea (Consan) a. Dependen Variable: GDP According o Table 3, he independen variable is having a bea value of Hence, a uni increase in he variable X () will lead o increase 0.35 uni in he variable Y (GDP). Y= X Impac of on NSE: Table 4: Model Summary Model R R Square Adjused R Square Sd. Error of he Esimae.889 a a. Predicors: (Consan), Table 4, manifess he regression model fi summary, he value of R,.889, signifies ha 88.9% of correlaion is presen beween he dependen and independen variables. The value of R 2, 0.79 depics linear regression and furher explains ha 79.% of he variance in he daase when he independen variable in he model affecs he dependen variable, and he adjused value of R 2,.78 depics ha 78.% of variaion is explained by only independen variables ha in acualiy affec he dependenvariable. 708

4 Table 5: ANOVA a Model Sum of Squares df Mean Square F Regression b Residual Toal a. Dependen Variable:NSE b. Predicors: (Consan), According o he Table 5, he F-es depics a high valueof along wihdegree of freedom (df), 23, which means here is nolinear relaionship beween any of he wo variables in he model. The p-value () is i.e. less han 0.05, which indicaes ha he regression model is saisically significan and predics he oucomevariable. Table 6: Coefficiens Model Unsandardized Coefficiens Sandardized Coefficiens B Sd. Error Bea (Consan) a. Dependen Variable: NSE According o Table 6, he independen variable is having a bea value of Hence, a uni increase in he variable X () will lead o increase 0.35 uni in he variable Y (NSE). Y= X Impac of on BSE: Table 7: Model Summary Model R R Square Adjused R Square Sd. Error of he Esimae.898 a a. Predicors: (Consan), Table 7, manifess he regression model fi summary, he value of R,.898, signifies ha 89.8% of correlaion is presen beween he dependen and independen variables. The value of R 2,.807 depics linear regression and furher explains ha 80.7% of hevariance in he daase when he independen variable in he model affecs he dependen variable, and he adjused value of R 2,.798 depics ha 79.8% of variaion is explained by only independen variables ha in acualiy affec he dependenvariable. 709

5 Table 8: ANOVA a Model Sum of Squares df Mean Square F Regression b Residual Toal a. Dependen Variable:BSE b. Predicors: (Consan), According o Table 8, he F-es depics a high value of along wih degree of freedom (df), 23, which means here is no linear relaionship beween any of hewo variables in he model. The p-value () is i.e. less han 0.05, which indicaes ha he regression model is saisically significan and predics he oucomevariable. Table 9: Coefficiens Model Unsandardized Coefficiens Sandardized Coefficiens B Sd. Error Bea (Consan) a. Dependen Variable: BSE According o Table 9, he independen variable is having a bea value of Hence, a uni increase in he variable X () will lead o increase 0.74 uni in he variable Y (BSE). Y= X Impac of on FCA: Tab 0: Model Summary Model R R Square Adjused R Square Sd. Error of he Esimae.842 a a. Predicors: (Consan), Table 0, manifess he regression model fi summary, he value of R,.842, signifies ha 84.2% of correlaion is presen beween he dependen and independen variables. The value of R 2,.709 depics linear regression and furher explains ha70.9%of hevariancein he daase when he independen variable in he model affecs he dependen variable, and he adjused value of R 2,.695 depics ha 69.5% of variaion is explained by only independen variables ha in acualiy affec he dependenvariable. 70

6 Table : ANOVA a Model Sum of Squares df Mean Square F Regression b Residual Toal a. Dependen Variable:FCA b. Predicors: (Consan), According o Table, he F-es depics a highvalue of along wih degree of freedom (df), 23, which means here is no linear relaionship beween any of hewo variables in he model. The p-value () is i.e. less han 0.05, which indicaes ha he regression model is saisically significan and predics he oucomevariable. Table 2: Coefficiens Model Unsandardized Coefficiens Sandardized Coefficiens B Sd. Error Bea (Consan) a. Dependen Variable:FCA According o Table 2, he independen variable is having a bea value of Hence, a uni increase in he variable X () will lead o increase uni in he variable Y (FCA). Y= X V. CONCLUSION. This assay manifesed ha have posiive impac on sock marke developmen indicaors (BSE and NSE). The correlaion resul depics ha here is a posiive correlaion among he economic indicaors, BSE and NSE (0.798, 0.78) and are also saisically significan wih p value being less han Dhiman& Sharma (203) 3 probed ha he influx of capial in erms of foreign direc invesmen () has a posiive impac on he economy as well as he capial markes. They concluded ha here is srong degree of correlaion beween & Sensex, and &Nify. 2. Anoher observaion of his assay manifesed ha have posiive impac on GDP in India. The correlaion resul depics ha here is a posiive correlaion among he economic indicaors and GDP (0.78) and is also saisically significan wih p value being less han Yameen& Ahmad (205) 7 have conduced a sudy and concluded ha here is a srong posiive relaion among andgdp. 3. The hird and he las observaion of his assay manifesed ha have posiive impac on FCA in India. The correlaion resul depics ha here is a posiive correlaion among he economic indicaors and FCA (0.695) and is also saisically significan wih p value being less han Koishwar (206) 8 found ha FII and are having he significan impac on foreignreserves. REFERENCES [] Alfaro, L., Kalemli-Ozcan, S., &Volosovych, V. (204). Sovereigns, upsream capial flows, and global imbalances. Journal of he European Economic Associaion, 2(5), [2] Balasubramanyam, V. N., Salisu, M., and Sapsford, D.( 996). Foreign direc invesmen and growh in EP and IS counries, Economic Journal, 06, [3] Dhiman, R. A. H. U. L., & Sharma, P. R. E. E. T. I. (203). Impac of flow of on Indian capial marke. European Journal of Business and Managemen, 5(9),

7 [4] Laskiene D., Pekarskiene I. (20). Hos Counry Impacs Of Inward : Why Such Differen Answers? Insiue for Inernaional Economics, chaper 2, p [5] Mucuk, M., Demirsel, M.T. (203). The effec of foreign direc invesmens on unemploymen: Evidence from panel daa for seven developing counries.journalof Business, Economics & Finance, 2 (3), pp [6] Padhi, S. P. (2002). Aracing foreign direc invesmen: A regional perspecive. Foreign Trade Review, 37(3-4), [7] Yameen, M., & Ahmad, I. Role of Inflows and Ouflows in he Journey of Make in India Campaign. [8] Koishwar, A. (206). The Impac of Exernal Funds Flows on Forex Reserves of India. Journal of Inernaional Economics, 7(2),4. 72