Mishra, Bikash Ranjan (2011): Inward FDI and firm-specific advantages of Indian manufacturing industries.
Download (563kB) | Preview
The unprecedented growth of international productions and Foreign Direct Investment (FDI) flows over the last two decades has led to the upsurge in scientific investigation into the distinctive facets of FDI. Despite the considerable amount of research undertaken, it seems that there is very little comprehensive economic analysis of FDI flows with respect to Indian firms. The present study attempts to bridge this gap by answering the following research question: what are the micro-level causes of FDI inflow, i.e. what are the determinants or pull factors of FDI inflow into Indian domestic firms? In order to analyze this question the study uses a panel data structure constructed over the recent 5 years, ranging from 2006 to 2010 and covering 22 sectors in Indian Manufacturing Industries. Adoption of Fixed and Random effects estimation procedure help to identify that among a set of firm-specific factors, only technological intensity, both in-house and import along with product differentiation have negatively contributed for foreign investors’ shareholding of local firms. The export performance, age, asset size and sales volume are among other remaining firm-specific characteristics which lack effective pulling effects in attracting FDI.
|Item Type:||MPRA Paper|
|Original Title:||Inward FDI and firm-specific advantages of Indian manufacturing industries|
|Keywords:||Key words: FDI; firm-specific factors; panel data|
|Subjects:||C - Mathematical and Quantitative Methods > C2 - Single Equation Models; Single Variables > C23 - Models with Panel Data; Longitudinal Data; Spatial Time Series
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B41 - Economic Methodology
|Depositing User:||Bikash Ranjan Mishra|
|Date Deposited:||03. Dec 2011 17:52|
|Last Modified:||12. Feb 2013 12:20|
A.T. Kearney and Global Business Policy Council. 2007. FDI Confidence Index, Alexandria, VA: A.T. Kearney.
Agarwal, S. and Ramaswami, S. N. 1992. Choice of foreign market entry mode: impact of ownership, location and internalization factors. Journal of International Business Studies, 23(1), 1–27.
Bartlett, C. and Ghoshal S. 1989. Managing Across Borders, Hutchinson Business Books: London.
Blomström, M. and R.E. Lipsey. 1986. Firm Size and Foreign Direct Investment. NBER Working Paper 2092. Cambridge, MA: National Bureau of Economic Research.
Brainard, S.L. 1997. An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade. American Economic Review, vol.87, pp.520-544.
Buckley, P.J. and M. Casson. 1976. The Future of the Multinational Enterprise. London: Macmillan.
Caves, R.E. 1982. Multinational Enterprise and Economic Analysis. Cambridge: Cambridge University Press.
Chen, E. 1983. Multinational Corporations, Technology and Employment, London: Macmillan. Coase, R.H. 1937. The nature of the firm. Economica, vol.4, pp.386-405.
Diaz-alejandro, c. F. 1977. Foreign Direct Investment by Latin Americans in Kindleberger, eds., Multinationals from Small Countries. Cambridge, MA: MIT Press.
Dunning, J.H. 1979. Explaining changing pattern of international production: in defence of eclectic theory. Oxford Bulletin of Economics and Statistics, vol. 41, pp.269-296.
Dunning, J.H. 1980. Toward an Eclectic Theory of International Production: Some Empirical Tests. Journal of International Business Studies, vol.11, pp.9-31.
Dunning, J.H. 1981. International Production and the Multinational Enterprise. London: Allen and Unwin.
Dunning, J.H. 1988. The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions. Journal of International Business Studies, vol.19, pp.1-31.
Dunning, J.H. 1993a. MNEs, the Balance of Payments and the Structure of Trade in Dunning, J.H. (ed.). Multinational enterprises and the global economy. Wokingham, UK and Reading, MA: Addison-Wesley.
Dunning, J.H. (ed.) 1993b. The Theory of Transnational Corporations, United Nations Library on Transnational Corporations, Vol. 1, London: Routledge.
Gatignon, H. and Anderson, E. 1988. The multinational corporation’s degree of control over foreign subsidiaries: an empirical test of a transaction cost explanation. Journal of Law, Economics and Organization, Vol. 4, pp. 305-36.
Geringer, J.M., Tallman, S. and Olsen, D.M. 2000. Product and international diversiﬁcation among Japanese multinational ﬁrms. Strategic Management Journal, 21, 51–80.
Giddy I. H. and Young S. 1982. Conventional theory and unconventional multinationals: do new forms of multinational enterprise require new theories? In: Rugman A M, editor. New theories of the multinational enterprise. p. 55– 78.
Goldman and Sachs. 2003. Annual Report: Every catalysts Elicits a Reaction. Gomes L, Ramaswamy K. 1999. An empirical examination of the form of the relationship between multinationality and performance. Journal of International Business Studies, 30(1): 173-187.
Grant RM, Jammine A. P. and Thomas H. 1988. Diversity, diversification and profitability among British manufacturing companies, 1972-84. Academic Management Journal 31(4): 771-801.
Hausman, J.A. 1978. Specification tests in econometrics, Econometrica , 1251-1272. Hitt M. A., Hoskisson R. E., Kim H. 1997. International diversification: effects on innovation and firm performance in product-diversified firms. Academic Management Journal, 40(4): 767-798.
Horst T. 1972. Firms and Industry Determinants of the Decision to Invest Abroad: An Empirical Study. Review of Economics and Statistics, vol.54, pp.258-266.
Hymer, S. H. 1960. The international operations of national ﬁrms: a study of direct investment’, PhD thesis, MIT, Cambridge, MA.
Kim, W. C., P. Hwang and W.P. Burghers. 1993. Multinationals’ Diversification and the Risk-Return Trade-Off. Strategic Management Journal, vol.14, pp.275-286.
Kindleberger, C.P. 1984. Multinational excursions (MIT Press, Cambridge, MA).
Kumar, N. 1987. Intangible assets, Internalization and Foreign Production: Direct Investment and Licensing in Indian Manufacturing, Weltwirtschaftiches Archiv, Vol.123, 325-45.
Kumar, N. 1990. Multinational Enterprises in India, London: Routledge.
Lall, S. 1980. Monopolistic Advantages and Foreign Involvement by U.S. Manufacturing Industry. Oxford Economic Papers, vol.32, pp.102-122.
Lall, S. and N. S. Siddharthan. 1982. The Monopolistic Advantage of Multinationals: Lessons from Foreign Investment in the US. Economic Journal, vol.92, pp.668-683.
Pearce, R.D. 1993. The Growth and Evolution Multinational Enterprise: Patterns of Geographical and Industrial Diversification. Cheltenham: Edward Elgar.
Porter, M. E. 1990. The Competitive Advantage of Nations, New York: Free Press.
Ramaswamy, K., Kroeck, K.G. and Renforth, W. 1996. Measuring the degree of internationalization of a ﬁrm: a comment. Journal of International Business Studies, Vol. 27(1), 167–77.
Singh, H. & Jun K. W. 1995. Some New Evidence on Determinants of Foreign Direct Investment in Developing Countries, Policy Research Working Paper No. 1531.
SIA Newsletter, April 2009. Secretariat for industrial assistance, Department of industrial policy & promotion, Ministry of commerce & industry, Government of India.
Stopford, J. M., & Wells, L. T. 1972. Managing the multinational enterprise. New York: Basic Books.
Sullivan D. 1994. Measuring the degree of internationalization of a firm. Journal of International Business Studies, Vol. 25(2): 325-342.
Tallman S, Li J. 1996. Effects of international diversity and product diversity on the performance of multinational firms. Academic Management Journal, Vol. 39(1): 179-196.
Terpstra, Vern and Chwo-Ming Yu. 1988. Determinants of Foreign Investment of U.S. Advertising Agencies. Journal of International Business Studies, Vol. 19: 33-46.
The Global Competitiveness Report 2010-11, World Economic Forum, Geneva. Switzerland 2010.
United Nations Conference on Trade and Development (UNCTAD). 2010. World Investment Report 2010: Investing in a Low Carbon Economy. New York and Geneva: United Nations.
United Nations Conference on Trade and Development (UNCTAD). 2011. World Investment Report 2011: Non-Equity Modes of International Production and Development. New York and Geneva: United Nations.
Verbeek, Marno. 2004. A guide to modern econometrics, John Wiley and Sons
Wells, L.T. 1983. Third World Multinationals: The Rise of Foreign Investments from Developing Countries, Cambridge, MA: MIT Press.
Yu, Chwo-Ming and Kiyohiko Ito. 1988. Oligopolistic Reaction and Foreign Direct Investment: The Case of the U.S. Tire and Textile Industries. Journal of International Business Studies, Vol. 19, pp. 449-460.