FDI inflow, ICT and economic performance of India: an empirical investigation

Abstract

Purpose

The aim of this study is to examine the impact of foreign direct investment (FDI) inflow and information and communication technology (ICT) on the economic performance of India by analysing annual data from 1991 to 2019.

Design/methodology/approach

This study has used data collected from secondary sources. The variables considered for the analysis are based on the review of theoretical and empirical literature. Moreover, apart from the quantitative variables, two qualitative variables have also been considered through the use of dummy variables. The Cobb–Douglas, Transcendental logarithmic and Simultaneous equations models have been used for the study.

Findings

The result reveals that the partial elasticities of the per-capita gross domestic product (PCGDP) of India with respect to FDI, mobile density (MD) and internet density (ID) are 0.074, 0.024 and 0.036, respectively. The positive and significant coefficient of the interaction among FDI, MD and ID in the estimation of the transcendental logarithmic function indicates the importance of ICT infrastructure in extracting the best out of FDI (the coefficient is 0.011 for the model without any control variables and it is 0.005 with control variables).

Originality/value

The findings of this study are more reliable as the latest available data have been analysed through the appropriate econometric models. This study will be useful for the policymakers in the formulation of policies with regard to foreign capital and digitalisation.

Citation

Nayak, S. and Sahoo, D. (2023), "FDI inflow, ICT and economic performance of India: an empirical investigation", International Journal of Emerging Markets, Vol. 18 No. 9, pp. 2054-2071. https://doi.org/10.1108/IJOEM-01-2021-0094