Contribution of Foreign Direct Investment in Nepal

Abstract

The purpose of this paper is to analyze the foreign direct investment status and environment in Nepal. There is significant contribution of foreign investment in economic development of developing countries like Nepal. Foreign investment attraction in a country like Nepal increases the foreign capital and technology transfer. Since 1990s inflow of foreign direct investment (FDI) has been increasing in Nepal due to the adoption of liberal economic policy by the government of Nepal. The Foreign Investment Technology Transfer Act (FITTA) has made better foreign investment environment in Nepal. This paper examines and analyses the contribution of FDI in Nepal. For the analysis, simple linear regression model has been applied to measure the impact of FDI on GDP and employment. Because FDI inflow has been recorded after 1990s, the impact of FDI has been analyzed in this paper over the period of 1990/91-2018/19. This study finds a positive impact of FDI on GDP and other macro variables.