FDI and Its Relationship with Macroeconomic Variables

Abstract

FDI refers to capital inflows from abroad that are invested to enhance the production capacity of the economy. FDI and economic growth has long been a subject of great interest in the field of international growth. In the era of volatile flows of global capital, the stability of FDI emerges as an effective channel to faster economic growth. In developing countries it plays an important role in the long-term development of a country as a source of capital and for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities.