Purpose: The aim of this study is to assess FDI's effect on economic growth while taking into account the moderating role of institutional strength.

Research Design: The World Bank's World Investment Reports serve as the data sources for the panel data used in the analysis of the study's variables. The GMM method in order to investigate the relationship that exists between Explained and Explainatory Variables. This examination takes place over the time period of 2001–2021 of 20 Asian counties. Research has been done to investigate the interaction effect in order to determine how foreign direct investment (FDI) affects economic growth, when institutional quality playing moderating role.

Finding: The study concluded that foreign direct investment (FDI) positively correlated with economic growth in Asian countries. Secondly, this research study also find, institutional quality significant positive moderating variable for studies concerning FDI and Economic growth in Asian countries. Thirdly, this study also finds that institutional quality significantly moderates the affiliation between FDI and economic growth in Asian countries.

Practical implications: The findings of this research having practical suggestion for policy makers in Asian Nations. This study recommends that economic growth can only be focused, if FDI and multinational investments used, assessed and monitored efficiently, and if efforts by the host countries are made to strengthen their financial markets by using these investments, and also focused on trade liberalization and human capital index.

Keywords: FDI, Economic Growth, Institutional Quality GMM