Technology Spillover and Determinants of Foreign Direct Investment: An Analysis of Indian Manufacturing Industries

smruti, Smruti Ranjan Behera (2012): Technology Spillover and Determinants of Foreign Direct Investment: An Analysis of Indian Manufacturing Industries.

Abstract

This paper examines the spillover effect of foreign direct investment (FDI) and determinant of FDI across Indian manufacturing industries. The result, based on two-equation model that allows for the two-way link between labor productivity of locally owned industries and foreign presence provide evidence that foreign presence brings new channels of knowledge and technology spillover to domestic industrial firms. We find that intermediate factors like R&D intensity and technology import intensity can impact positively the productivity of domestic firms. Furthermore, we find that bigger market size and highly productive domestic sectors are likely to attract more foreign capital into Indian industries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign Direct Investment; Technology Spillover; Manufacturing; Panel Cointegration; Unit Root Tests
• Subjects: F - International Economics > F3 - International Finance > F30 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General

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