International Journal of Contemporary Research in Multidisciplinary

In all countries, especially developing, foreign direct investment (FDI) plays a very important role, they are even considered as the engine of economic growth and development. Engaged in good conditions, foreign capital can help reduce the gap between capital requirements and national saving, raise skill levels in the host economy, improve market access and contribute to technology transfer and good governance. Foreign investment comes in many forms. In what follows, we will show through theoretical and empirical studies the effect of the investment on economic growth of countries. This study analyzes the relationship between foreign direct investment, Trade openness, Inflation rate and economic growth in Indian economy from 2000-01 to 2022-23 using regression analysis. The results indicated, foreign investment has positive impact on the economic growth of India during study period, which could be a good tool to prioritize the allocation of resources across sectors to promote foreign direct investment. Further results also revealed that trade openness has also positively significant impact on the economy growth of India during study period which could be another important tool for policy makers to boost the economy of India. Based on these results, it is recommended that the governments of these countries implement policies and measures to attract the FDI inflows and the effectively encourages trade-related factors to safeguard and promote economic growth. Additionally, with regard to inflation, it is advisable for these governments to implement measures aimed at curbing and controlling inflation, as rising inflation has adverse effects on economic growth.