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<p>In the contemporary era of globalization, international factor mobility, in the form of international migration and foreign direct investment, has become a decisive&#xa0;force in shaping India’s economic landscape. Therefore, this study investigates the factors responsible for Indian bilateral emigration and inward FDI stock and subsequently analyzes the nature of their interrelationship: substitute or complement. To conduct the analysis, we use a panel dataset, considering India as the reporting country with 88 partner countries worldwide from 2000 to 2020, and employ both single- and simultaneous-equation model estimation techniques. Our empirical analysis suggests that the gravity and cultural linkage measures – GDP source and host, distance, common language, and colony; trade openness of source and host countries; the migration-specific factors – remittances, employment rate, educational quality, internal conflict; and FDI-specific factors – exchange rate volatility, inflation rate, corporate tax, and natural resources are the primary drivers of Indian bilateral emigration and inward FDI. Furthermore, this study finds that an increase in bilateral inward FDI reduces emigration to partner countries by 61.53%. Similarly, an increase in bilateral emigration reduces inward FDI by 95.85% in the reporting country, indicating a bidirectional substitutability relationship between the two variables. This paper sheds light on the connection between bilateral emigration and inward FDI and emphasizes the need for policymakers to adopt policies that support India’s economy and long-term prosperity.</p>

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A Bilateral Analysis of India’s International Factor Mobility: An Empirical Investigation on Their Determinants and Interrelationship

  • 期刊论文

  • 发表日期：

    2026年5月26日

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  • Monalisa Khatua,
  • Bikash Ranjan Mishra

摘要

In the contemporary era of globalization, international factor mobility, in the form of international migration and foreign direct investment, has become a decisive force in shaping India’s economic landscape. Therefore, this study investigates the factors responsible for Indian bilateral emigration and inward FDI stock and subsequently analyzes the nature of their interrelationship: substitute or complement. To conduct the analysis, we use a panel dataset, considering India as the reporting country with 88 partner countries worldwide from 2000 to 2020, and employ both single- and simultaneous-equation model estimation techniques. Our empirical analysis suggests that the gravity and cultural linkage measures – GDP source and host, distance, common language, and colony; trade openness of source and host countries; the migration-specific factors – remittances, employment rate, educational quality, internal conflict; and FDI-specific factors – exchange rate volatility, inflation rate, corporate tax, and natural resources are the primary drivers of Indian bilateral emigration and inward FDI. Furthermore, this study finds that an increase in bilateral inward FDI reduces emigration to partner countries by 61.53%. Similarly, an increase in bilateral emigration reduces inward FDI by 95.85% in the reporting country, indicating a bidirectional substitutability relationship between the two variables. This paper sheds light on the connection between bilateral emigration and inward FDI and emphasizes the need for policymakers to adopt policies that support India’s economy and long-term prosperity.