Horizontal and Vertical Technology Spillover of Foreign Direct Investment: An Evaluation across Indian Manufacturing Industries

Behera, Smruti Ranjan Behera and Dua, Pami Dua and Goldar, Bishwanath Goldar (2012): Horizontal and Vertical Technology Spillover of Foreign Direct Investment: An Evaluation across Indian Manufacturing Industries.

Abstract

This paper explores the horizontal and vertical technology spillover effect of foreign direct investment (FDI) across Indian manufacturing industries. On the basis of Pedroni cointegration tests, we find that technology spillovers can be transmitted via all kinds of intermediate factors. We find that the horizontal foreign presence and inter-industry foreign presence have exclusive penetration effect to spur labor productivity and technology spillover across Indian industries. Furthermore, intermediate factors like technology import intensity, inter-industry technology import intensity, R&D intensity and inter-industry R&D intensity promote technology spillover and labor productivity across Indian manufacturing industries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign Direct Investment; Technology Spillover; Manufacturing; Panel Cointegration; Unit Root Tests
• Subjects: P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P33 - International Trade, Finance, Investment, Relations, and Aid; 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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