The impact of foreign direct investment on economic growth in Sri Lanka

Abstract

Foreign Direct Investment (FDI) has been used by developing countries as a tool to solve their economic problems in the recent past. Sri Lanka is also not an exception to this practice. This research is aimed at tracing the impact of FDI in promoting economic growth by using the time series annual data from 1978 - 2012 in Sri Lanka. Multiple regression models were used to estimate the impact of FDI on economic growth. The Minitab, SAS, Excel and E-views software were used for data analysis. The empirical evidence shows that FDI positively and statistically influences to determine economic growth in Sri Lanka. However, this study further reveals that the actual impact of FDI can be felt after time lag of two years.