IDEAS home Printed from https://ideas.repec.org/a/ibn/ijbmjn/v11y2016i9p154.html
   My bibliography  Save this article

Technological Capability as a Key Determinant for Foreign Direct Investment: The Case of Indian Sub-Continent

Author

Listed:
  • Tahir Iqbal
  • Abdul Razak Abdul Hadi
  • Sehrish Zafar

Abstract

This paper is pursued with the objective of investigating technological capability as a key determinant for foreign direct investment in Indian sub-continent consisting of India, Pakistan and Bangladesh. The focus of the study is to identify why some countries are attracting more inward FDI than others within the same geographical region as well as to uncover the plausible reason that could lure foreign direct investment (Indian sub-continent caters for one-fifth of the global population). Research methodology uses static panel data models involving fixed and random effects over yearly data from 1994 until 2011. Furthermore, a dynamic panel model via Park method is used on the datasets. The findings which indicate clear implications in those countries with strong domestic technological capabilities seem to have a solid influence in attracting inward FDI. The study also reveals that the relationship between domestic technological development and inward FDI is even stronger than other controlled variables (inflation, lending rates and GDP) in the model.

Suggested Citation

  • Tahir Iqbal & Abdul Razak Abdul Hadi & Sehrish Zafar, 2016. "Technological Capability as a Key Determinant for Foreign Direct Investment: The Case of Indian Sub-Continent," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(9), pages 154-154, August.
    • Handle: RePEc:ibn:ijbmjn:v:11:y:2016:i:9:p:154
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ijbm/article/download/49590/33386
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ijbm/article/view/49590
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    2. Chakraborty, Chandana & Nunnenkamp, Peter, 2008. "Economic Reforms, FDI, and Economic Growth in India: A Sector Level Analysis," World Development, Elsevier, vol. 36(7), pages 1192-1212, July.
    3. Chandana Chakraborty & Parantap Basu, 2002. "Foreign direct investment and growth in India: a cointegration approach," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1061-1073.
    4. Sanjaya Lall, 2001. "Competitiveness, Technology and Skills," Books, Edward Elgar Publishing, number 2298.
    5. Durham, J.B.J. Benson, 2004. "Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth," European Economic Review, Elsevier, vol. 48(2), pages 285-306, April.
    6. Romita Biswas, 2002. "Determinants of Foreign Direct Investment," Review of Development Economics, Wiley Blackwell, vol. 6(3), pages 492-504, October.
    7. Barry P. Bosworth & Susan M. Collins, 1999. "Capital Flows to Developing Economies: Implications for Saving and Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1), pages 143-180.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pravakar Sahoo & Ranjan Kumar Das, 2021. "Differential Growth Impact of FDI on LICs, LMICs, and ECs: The Role of Absorptive Capabilities," IEG Working Papers 447, Institute of Economic Growth.
    2. Kose,Ayhan & Ohnsorge,Franziska Lieselotte & Ye,Lei Sandy & Islamaj,Ergys, 2017. "Weakness in investment growth : causes, implications and policy responses," Policy Research Working Paper Series 7990, The World Bank.
    3. Garita, Gus, 2009. "How Does Financial Openness Affect Economic Growth and its Components?," MPRA Paper 20099, University Library of Munich, Germany.
    4. Robert Dekle & Cheng Hsiao & Siyan Wang, 2001. "The Real Effects of Capital Inflows on Emerging Markets," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 165-202.
    5. Justin Paul & Gurmeet Singh, 2017. "The 45 years of foreign direct investment research: Approaches, advances and analytical areas," The World Economy, Wiley Blackwell, vol. 40(11), pages 2512-2527, November.
    6. Vinish Kathuria, 2019. "Growth and Investment: Testing for the Relationship for South Asian Countries," Millennial Asia, , vol. 10(3), pages 337-371, December.
    7. Pooja Sengupta & Roma Puri, 2020. "Exploration of Relationship between FDI and GDP: A Comparison between India and Its Neighbouring Countries," Global Business Review, International Management Institute, vol. 21(2), pages 473-489, April.
    8. Edouard Mien, 2023. "Statistical Overview and Empirical Literature on Foreign Direct Investment in Developing Countries WP326," Working Papers hal-04123985, HAL.
    9. Muhammad Arshad Khan, 2007. "Foreign Direct Investment and Economic Growth: The Role of Domestic Financial Sector," PIDE-Working Papers 2007:18, Pakistan Institute of Development Economics.
    10. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(2), pages 143-197.
    11. Nyang`oro Owen, 2017. "Working Paper 285 - Capital Inflows and Economic Growth in Sub-Saharan Africa," Working Paper Series 2409, African Development Bank.
    12. Ranjan Dash & P. Parida, 2013. "FDI, services trade and economic growth in India: empirical evidence on causal links," Empirical Economics, Springer, vol. 45(1), pages 217-238, August.
    13. Gunby, Philip & Jin, Yinghua & Robert Reed, W., 2017. "Did FDI Really Cause Chinese Economic Growth? A Meta-Analysis," World Development, Elsevier, vol. 90(C), pages 242-255.
    14. Zaiter Lahimer, Mahjouba, 2011. "L’impact des entrées de capitaux privés sur la croissance économique dans les pays en développement," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/7670 edited by Sterdyniak, Henri.
    15. Li, Xiaoying & Liu, Xiaming, 2005. "Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship," World Development, Elsevier, vol. 33(3), pages 393-407, March.
    16. Choong, Chee-Keong & Baharumshah, Ahmad Zubaidi & Yusop, Zulkornain & Habibullah, Muzafar Shah, 2010. "Private capital flows, stock market and economic growth in developed and developing countries: A comparative analysis," Japan and the World Economy, Elsevier, vol. 22(2), pages 107-117, March.
    17. Paul, Justin & Feliciano-Cestero, María M., 2021. "Five decades of research on foreign direct investment by MNEs: An overview and research agenda," Journal of Business Research, Elsevier, vol. 124(C), pages 800-812.
    18. Nevine Eid, 2006. "FDI-Growth Relationship: Is Financial Deepening a Pre-condition," EcoMod2006 272100023, EcoMod.
    19. Igan, Deniz & Kutan, Ali M. & Mirzaei, Ali, 2020. "The real effects of capital inflows in emerging markets," Journal of Banking & Finance, Elsevier, vol. 119(C).
    20. Gibogwe, Vincent & Nigo, Ayine & Kufuor, Karen, 2022. "FDI and economic growth in SADC region," MPRA Paper 115029, University Library of Munich, Germany, revised 29 Sep 2022.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijbmjn:v:11:y:2016:i:9:p:154. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.