Abstract

This research attempts to test the relationship between economic growth and educational sector foreign direct investment in the country of India. An augmented Cobb-Douglas production function is theorized to show the impact of FDI on economic growth through capital accumulation in the economy. This is then further dissected to show the impact of foreign investment into education, specifically within India. An endogenous growth model then follows illustrating how FDI leads to spillovers in the host country. These spillovers are directly applied to India and its education sector. It is hypothesized that FDI in education will lead to economic growth at a faster rate than other service sectors because of its beneficial spillovers. A number of previous studies are summarized to support both the theory and findings of this research. Finally, using a time-series data set ranging from 2006-2011 in quarterly sets, the theorized model is econometrically tested in a number of OLS regressions. When following the proposed theory and including domestic investment, the results provided insignificant evidence not allowing any conclusion to be drawn about FDI in the educational sector and its impact on economic growth. Further analysis, omitting domestic investment, provided clear evidence that FDI into education promotes tremendous growth within India.

Advisor

Yang, Jingjing

Department

Economics

Disciplines

Economics

Publication Date

2012

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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© Copyright 2012 Ian P. Haley