Which one of the following is an important driver of economic growth w

Which one of the following is an important driver of economic growth which helps in sustaining high growth rate, increasing productivity, a major source of non-debt financial resources, and employment generation ?

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Foreign Direct Investment

Ease of doing business

Make in India

Start-up India

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This question was previously asked in

UPSC SO-Steno – 2018

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Foreign Direct Investment (FDI) is widely recognized as a crucial driver of economic growth. It brings significant capital flows which are typically non-debt creating, unlike external borrowings. FDI often brings advanced technology, management expertise, and access to global markets, which can enhance productivity. It also leads to the establishment of new businesses or expansion of existing ones, creating substantial employment opportunities. Ease of doing business is an enabler, Make in India is a manufacturing promotion initiative, and Start-up India supports entrepreneurship, but FDI is the direct source of non-debt finance and a comprehensive driver across all mentioned aspects.

FDI is a major source of non-debt capital, technological transfer, and management know-how, directly contributing to increased productivity, employment generation, and sustained economic growth.

FDI inflow is influenced by factors like market size, economic stability, policy environment (ease of doing business), availability of skilled labor, and infrastructure. Governments often actively seek to attract FDI through policy reforms, incentives, and promotional activities like Make in India, aiming to leverage its benefits for overall economic development.

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