Impact of FDI in India: State-Wise Analysis in an Econometric Framework

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Vani Archana
Vani Archana
2
N.C.Nayak
N.C.Nayak
3
P.Basu
P.Basu

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While there are many empirical studies on the impact of FDI in developing countries, few of them have been carried out in India at the state level which gives a holistic as well as detailed view of the spillover of FDI. This paper analyzes the impact of FDI on eight major states in India during the post-reform period from 1991-2004 using three models, FE, RE and SUR models. FE (Fixed Effects) and RE (Random Effects) give a holistic view whereas the SUR (Seemingly Unrelated regression) model gives a more detailed picture of the eight states of India. Results show that overall FDI has a positive impact on labour productivity and employment for the period considered. However, across states FDI is more productive only when the states have more absorptive power also labour productivity is growing only at the expense of employment.

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Funding

No external funding was declared for this work.

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The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Not applicable for this article.

Vani Archana. 2014. \u201cImpact of FDI in India: State-Wise Analysis in an Econometric Framework\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 14 (GJHSS Volume 14 Issue E2): .

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GJHSS Volume 14 Issue E2
Pg. 15- 24
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Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

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April 17, 2014

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While there are many empirical studies on the impact of FDI in developing countries, few of them have been carried out in India at the state level which gives a holistic as well as detailed view of the spillover of FDI. This paper analyzes the impact of FDI on eight major states in India during the post-reform period from 1991-2004 using three models, FE, RE and SUR models. FE (Fixed Effects) and RE (Random Effects) give a holistic view whereas the SUR (Seemingly Unrelated regression) model gives a more detailed picture of the eight states of India. Results show that overall FDI has a positive impact on labour productivity and employment for the period considered. However, across states FDI is more productive only when the states have more absorptive power also labour productivity is growing only at the expense of employment.

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Impact of FDI in India: State-Wise Analysis in an Econometric Framework

Vani Archana
Vani Archana
N.C.Nayak
N.C.Nayak
P.Basu
P.Basu

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