The determinants of US foreign investment in India: implications and policy issues

Traces the growth of US foreign direct investment (FDI) in India and the changing attitude of the Indian government towards it as part of its liberalization programme. Reviews previous research on the determinants of FDI and uses regression analysis on 1962‐1994 data to identify the factors affecting US FDI in India, current trends and the impact on the Indian economy. Finds that only the relatively weak exchange rate appears to be a significant factor and that US FDI has been increasing in dollar amounts and relative percentage growth, especially since the economic reforms of the 1990s. Calls for improvements in infrastructure and reductions in red tape and protectionism to encourage further growth.