Indian Politics and Foreign Direct Investment: An Empirical Analysis Using ARDL Approach

The nation's policymakers have consistently recognized FDI as a crucial component of economic progress, and the country's political environment impacts the flow of FDI. Consequently, understanding the interplay between FDI inflow and the political climate is paramount for devising effective strategies that foster sustainable economic growth. It becomes essential to study the role of variables of the political environment (political stability and Control of corruption efforts) on the FDI inflow and in economic development and find out the degree of relation between variables of a political environment with the FDI inflow and con-integration among the variable using well know and proven time series technique of Auto Regressive Distributed Lag (ARDL) method. The result of the study indicates that both the variables (political stability and Control of corruption) do not work in the short run, but both are significant in the long run. Political stability positively impacts the FDI inflow if there is improvement in the country's political stability, while Control of corruption negatively impacts the FDI inflow.