Navigating New Normal: Analyzing FDI Dynamics Between the USA and India During the Trump Era and Beyond Using ARDL and VAR Models

Abstract

The current investigation is based upon an augmented Gravity Model to analyze the FDI Inflows from the USA to India. Moreover, sophisticated and rigorous econometric methods, using ARDL and VAR models, have been applied. Based on the inclusion of variables such as GDP, tariffs, political and economic risk, FDI and exchange rate volatility, the paper examines the emerging FDI trends during the1982-2023 period with special fucus on the Trump Regime during 2017-21. Thus, the research underlines how the political and economic obstacles set by Trump’s administration might have changed the investment behaviors, regarding bilateral economic and strategic relations.