Bikash Ranjan Mishra, Dr. (2011): Spill-over effects of foreign direct investment: an econometric study of Indian firms.
Download (586kB) | Preview
The channel through which the inflows of foreign direct investment (FDI) contribute to economic progress of the host economy like India can both be direct as well as indirect. Such pecuniary benefits resulting in improved productivity of local firms which cannot be fully appropriated by foreign investors are better known in the literature as spill-over effects. The paper is based on the following research question: what are the firm-level direct impact and indirect effects of FDI in India? This question is analysed with reference to a micro-level investigation which tests particularly for inter- and intra-industrial spill-overs from FDI by applying a Panel framework with Levinsohn-Petrin approach. The study envelops a rich firm-level dataset from 22 sectors of Indian Manufacturing industries and over a time period from 2006 to 2010. After controlling for firm-wise and year-wise effects, the paper finds marginal and insignificant direct impact and mixed spill-over effects of FDI inflow on the productivity of local firms.
|Item Type:||MPRA Paper|
|Original Title:||Spill-over effects of foreign direct investment: an econometric study of Indian firms|
|English Title:||Spill-over effects of foreign direct investment: an econometric study of Indian firms|
|Keywords:||FDI, spill-over effects, panel data, Levinsohn-Petrin approach|
|Subjects:||F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements
C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models
|Depositing User:||Bikash Ranjan Mishra|
|Date Deposited:||30. Mar 2012 16:20|
|Last Modified:||14. Jan 2016 07:45|
• Aitken, B. and A. Harrison. 1999. Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela. American Economic Review, vol.89, pp.605-618.
• Blomström, M. and R.E. Lipsey. 1986. Firm Size and Foreign Direct Investment. NBER Working Paper 2092. Cambridge, MA: National Bureau of Economic Research.
• Blomström, M., A. Kokko and M. Zejan. 2000. Foreign Direct Investment. Firm and Host Country Strategies, London: Macmillan.
• Carr, David L., James R. Markusen and Keith Maskus 2001. Estimating the knowledge-capital model of the multinational enterprise, American Economic Review, 91, pp. 693-708.
• Caves, R.E. 1971. International Corporations: the Industrial Economics of Foreign Investment. Economica, vol.38, pp.1-27.
• Cohen, W.M. and Levinthal, D.A. 1989. Innovation and learning: the two faces of R&D, Economic Journal, 99, 569–96.
• Driﬃeld, N. 2001. The impact on domestic productivity of inward investment in the UK, Manchester School, 69(1), 103–19.
• Du, Luosha, Ann Harrison and Gary Jefferson. 2011. Do Institutions Mater for FDI Spillovers? The Implications of China’s Special Characteristics. Cambridge, MA: NBER Working Paper 16767.
• Edfelt, Ralph B. 1975. Direct Investment in a Developing Economy: Towards Evaluating the Human Resource Development Impact in Brazil. Ph.D. dissertation, University of California, Los Angeles.
• Globerman, S. 1979. Foreign Direct Investment and ‘Spillover’ Efficiency Benefits in Canadian Manufacturing Industries. The Canadian Journal of Economics, vol.12, pp.42-56.
• Goncalves, Reinaldo. 1986. Technological Spillovers and Manpower Training: A Comparative Analysis of Multinational and National Enterprises in Brazilian Manufacturing. Journal of Development Economics, 11(1), pp. 119–32
• Haddad, M. and A. Harrison. 1993. Are there Positive Spill-overs from Direct Foreign Investment? Evidence from Panel Data for Morocco. Journal of Development Economics, vol. 42, pp.51-74.
• Javorick, B. S. 2004. Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages. American Economic Review, Vol.94, No.3, pp.605-627.
• Levinsohn, J., & Petrin, A. 2003. Estimating production functions using inputs to control for unobservables. Review of Economics Studies, Vol. 70,317−342.
• Olley, G., & Pakes, A. 1996. The dynamics of productivity in the telecommunication equipment industry. Econometrica, 64, 1263−1297.
• Teece, D. J. 1981. The Multinational Enterprise: Market Failure and Market Power Consideration. Sloan Management Review, Vol. 22, pp.3-17.
• Zahra, S.A. and G. George. 2002. Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, Vol. 27:2, pp. 185-203.
• World Development Report 1993 Investing in Health World Bank; Oxford University Press