Open AccessRelationship between FDI, Foreign Exchange Earnings through Inbound Tourism and Growth of Indian Economy
Author(s) -
Piyali Roy Chowdhury,
A. Anuradha
Publication year - 2019
Publication title -
international journal of recent technology and engineering
Language(s) - English
Resource type - Journals
ISSN - 2277-3878
DOI - 10.35940/ijrte.d8306.118419
Subject(s) - foreign direct investment , granger causality , economics , earnings , tourism , per capita , exchange rate , distributed lag , foreign exchange , error correction model , cointegration , international economics , monetary economics , economy , macroeconomics , geography , population , demography , accounting , archaeology , sociology , econometrics
Foreign Direct Investment (FDI) has been playing a crucial role in the development of Indian economy ever since liberalization.The role of FDI, hence, can be discussed from the point of one of much deliberated sectors, tourism, in this case. The current study, thus, is based on investigating an association between FDI, Foreign Exchange Earnings from tourism and per capita growth with respect to Indian economy for a period of 1996-2018. The analysis proves a cointegrating relationship between them throughAuto Regressive Distributed Lag (ARDL) Modelling Approach. It proves FDI to be an influential factor in enhancing foreign exchange earnings from tourism for inbound tourism industry and per capita economic growth. Through Error Correction Model, it is proved that the modelscancorrect seventy-seven- and eighty-three percent imbalances in short run. Applying Granger Causality approach, the study proves per capita economic growth granger causes FDI. Subsequently,is playing a major role in attracting foreign exchange earnings from inbound tourism in India.Finally, the study suggests certain policy measures for enhancing per capita growth that will ultimately promote FDI to augment conditions of tourism industry in Indian economy.