The Impact of the Growth of FDI on the Indian Economy - Research Proposal Example

The dissertation will start with a brief description of the underlying concepts of FDI, and theories used to analyze these instruments. This will be followed by a literature review that will delve into previous research in the same field. The next section, research methodology will cover the interviewing techniques, secondary data collection methods, and the mathematical models used to analyse the data. Lastly, the proposal will analyse and interpret the results obtained, followed by a possible explanation of the same.

This will be followed by recommendations for the Government. International investment flows into a country are determined by a number of endogenous and exogenous variables. Endogenous variables include the host country’s policies on foreign investment or production, internal operational environment including licensing arrangements and documentation process, infrastructure, relative political stability, the quality of the labor force, employee or labor relations, cultural factors including language problems and environmental laws that specifically address manufacturing (Athreye, S & Kapur S, 2001).

On the other hand, exogenous variables include global investment climates such as the ease with which international capital or direct investment flows can move, the opportunity cost factor, exchange rates, balance of payments related government policies and the global security environment. Foreign Direct Investment (FDI) flows in India has been a major global economic phenomenon during the last decades and its impact on India’s economy has had a series of ripple effects on the rest of the world too (Asiedu, E & Lien, D, 2004).

FDI in simplest of terms can be defined as “an investment by a foreign corporation to obtain means of production or alternatively, long term interests, in another organization outside its own economy”.