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Technology Spillover And Determinants Of Foreign Direct Investment: An Analysis Of Indian Manufacturing Industries

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  • SMRUTI RANJAN BEHERA

    (Indian Institute of Technology Ropar, India)

Abstract

This paper examines the technology spillover from foreign direct investment (FDI) and subsequently, determines the factors for FDI-participation in Indian manufacturing industries. The result based on a two-equation model facilitating the link between labor productivity and foreign presence suggests that foreign presence plays an important role in the diffusion of technology from foreign firms to domestic firms, provided the recipient firms have the capacity to absorb and adopt the foreign technology. Furthermore, the results suggest that industries experiencing decline in the tariff cost exhibit stronger growth in labor productivity. Finally, we find that large domestic market size and highly productive domestic sectors, are likely to attract more FDI from abroad.

Suggested Citation

  • Smruti Ranjan Behera, 2015. "Technology Spillover And Determinants Of Foreign Direct Investment: An Analysis Of Indian Manufacturing Industries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(3), pages 55-83, September.
    • Handle: RePEc:jed:journl:v:40:y:2015:i:3:p:55-83
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    Cited by:

    1. Sakshi Aggarwal & Debashis Chakraborty, 2022. "Which Factors Influence India’s Bilateral Intra-Industry Trade? Cross-Country Empirical Estimates," Working Papers 2260, Indian Institute of Foreign Trade.
    2. Nita Rudra & Meir Alkon & Siddharth Joshi, 2018. "FDI, Poverty, and the Politics of Potable Water Access," Economics and Politics, Wiley Blackwell, vol. 30(3), pages 366-393, November.
    3. Sugam Agarwal & Smruti Ranjan Behera, 2022. "Geographical concentration of knowledge and technology-intensive industries in India: empirical evidence from establishment-level analysis," Indian Economic Review, Springer, vol. 57(2), pages 513-552, December.

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    More about this item

    Keywords

    Foreign Direct Investment; Technology Spillover; Manufacturing Industries;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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