Determinants of FDI in India and Sri Lanka

Published date01 May 2018
Date01 May 2018
Subject MatterCommentary
Determinants of FDI in
India and Sri Lanka
Badar Alam Iqbal1
Mohd Nayyer Rahman2
Nadia Yusuf3
Determinants of Foreign Direct Investment has remained an exhaustive endeavour
for the researchers and at times it becomes a Pollyanna for policy making.
The present piece of research is an attempt to gauge the determinants of FDI for
India and Sri Lanka. The plausible determinants are selected for empirical testing
such as Market Size, Inflation, Trade Openness and Current Account Balance.
Proxy variables are selected in case the determinant is not measured in itself.
Augmented Dicky Fuller test (Dicky & Fuller, 1981) is used for checking stationary
and for hypotheses testing Ordinary Least Squares Regression is used.
JEL: C13, E22, F21, F23
FDI, determinants, trade openness, current account
The present commentary pertains to the empirical identification of determinants
of foreign direct investment (FDI) for India and Sri Lanka. The operation of
MNCs in both the regions that are India and Sri Lanka includes greenfield
investments, joint ventures and mergers & acquisitions. The expansion of
multinationals has been deliberated upon by Vernon (1966) and Dunning (2008).
Several researchers have attempted to identify the determinants of FDI with
respect to specific countries. The model used incorporates variables used by
earlier researchers in one or the other manner (Janicki & Wunnava, 2004; Kimino,
Saal, & Driffield, 2007; Onyeiwu & Shrestha, 2004).
Foreign Trade Review
53(2) 116–123
©2018 Indian Institute of
Foreign Trade
SAGE Publications
DOI: 10.1177/0015732517734751
1 Faculty of Economics & Finance, Monarch University, Zug, Switzerland.
2 Department of Commerce, AMU, Aligarh, UP, India.
3 Department of Economics, King Abdulaziz University, Saudi Arabia.
Corresponding author:
Badar Alam Iqbal, Faculty of Economics & Finance, Monarch University, Zug, Switzerland.

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