Foreign Direct Investment Inflows in Pre & Post Liberalization Period: An Empirical Analysis in the Context of India

Gholam Syedain Khan


The paper endeavours to show a comparative study of FDI inflows in India and in some select economies of the world in the pre and post-liberalization periods. It considers the sectoral and regional distributions of FDI inflows in India. Further, it attempts to find out the growth rate of FDI in India from 1975-76 to 2011-12 and tests for the statistical significance of initiation of economic reforms in the year 1991-92 in terms of FDI inflows. In order to fulfil the objectives of the paper, certain statistical tests are applied on the data series like Unit Root Test (to test for the non-stationarity of the data series), Simple Regression Analysis (to find out the overall growth rate of FDI inflows) and Chow Test (to test for the statistical significance of the known break year, 1991-92 in terms of FDI inflows). However, the results of the statistical tests claim that, the growth rate of total FDI inflows in India across the entire period of analysis is 23% per annum. Moreover, 1991-92 turns out to be a statistically significant year in terms of FDI inflows in India. Hence, the change in economic policy has made a significant impact on the FDI inflow in India. 


Foreign Direct Investment (FDI), New Economic Policy, Unit Root Test, Growth Analysis, Structural Break, Chow Test.

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