Macroeconomic Impact of Foreign Direct Investment in Sri Lanka
A. M. M. Mustafa

Dr. A. M. M. Mustafa, Senior Lecturer, Department of Business Economics Management and Commerce, South Eastern University of Sri Lanka, Oluvil, Sri Lanka.
Manuscript received on 18 September 2019 | Revised Manuscript received on 05 October 2019 | Manuscript Published on 11 October 2019 | PP: 252-259 | Volume-8 Issue-2S10 September 2019 | Retrieval Number: B10430982S1019/2019©BEIESP | DOI: 10.35940/ijrte.B1043.0982S1019
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Abstract: This research is aimed at tracing the impact of Foreign Direct Investment (FDI) in promoting macroeconomic variables such as gross domestic production, industrial production, total domestic investment, exports, imports, Board of Investment approved exports, Board of Investment approved imports and Board of Investment approved employments by using the time series annual data for 1978 – 2018 in Sri Lanka. Multiple Regression Analysis was used to estimate the impact of FDI on selected macroeconomic variables. Estimation method was Ordinary Least Squares. EViews 10 software were used for data analysis. The empirical evidence shows that there is a statistically significant positive impact of FDI on selected macroeconomic variables except in the case of imports. However, this study further reveals that the actual impact on macroeconomic variables can be felt after certain time lag. But the impact on total domestic investment was realized immediately. Further, this research has identified various problems faced in attracting FDI including ideal sector identification and the appropriate recommendations have been presented in order to realize the major benefits from FDI inflow into the country.
Keywords: FDI; Gross Domestic Production; Industrial Production; Total Domestic Investment; Exports; Imports; Employments.
Scope of the Article: Social Sciences