Impact of Foreign Capital on Economic Growth in Developing Countries: A Debatable Issue in India

Abstract

Foreign capital is increasingly becoming a significant resource to spur economic growth in many developing countries. This present study used time series data from 1978 to 2014 to investigate the impact of foreign capital on economic growth in India. We found that external debt and foreign remittances lead positively towards economic growth on one hand while on the other hand ODA and FDI negatively affects economic growth in India. The popularly believed argument that foreign capital can help boost economic growth remains an arguable issue in India.

Keywords: India, Foreign Capital, Economic Growth