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What Drives India’s Outward FDI?

Author

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  • Peter Nunnenkamp

    (Peter Nunnenkamp is affiliated with Kiel Institute for the World Economy, Hindenburgufer 66, D-24105 Kiel, Germany. E-mail: peter.nunnenkamp@ifw-kiel.de)

  • Maximiliano Sosa Andrés

    (Maximiliano Sosa Andrés, Towers Watson, Montevideo, Uruguay. E-mail: Maximiliano.Sosa@towerswatson.com)

  • Krishna Chaitanya Vadlamannati

    (Krishna Chaitanya Vadlamannati is affiliated with University of Goettingen, Germany. E-mail: kcv_dcm@yahoo.in)

  • Andreas Waldkirch

    (Andreas Waldkirch is affiliated with Colby College, Waterville ME, United States. E-mail: andreas.waldkirch@colby.edu)

Abstract

We empirically assess the determinants of India’s FDI outflows across a large sample of host countries in the 1996–2009 period. Based on gravity model specifications, we employ Poisson pseudo maximum likelihood (PPML) estimators. Major findings include: India’s outward FDI is hardly affected by motives to access raw materials or superior technologies. Market-related factors appear to have dominated the location choices of Indian direct investors. A larger Indian diaspora in the host countries attracts more FDI. Finally, it seems that Indian direct investors are relatively resilient to weak institutions and economic instability in the host countries. However, we do not find robust evidence that India provides an alternative source of FDI for countries that traditional investors tend to avoid.

Suggested Citation

  • Peter Nunnenkamp & Maximiliano Sosa Andrés & Krishna Chaitanya Vadlamannati & Andreas Waldkirch, 2012. "What Drives India’s Outward FDI?," South Asian Journal of Macroeconomics and Public Finance, , vol. 1(2), pages 245-279, December.
    • Handle: RePEc:sae:smppub:v:1:y:2012:i:2:p:245-279
    DOI: 10.1177/2277978712473402
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    3. Kottaridi, Constantina & Giakoulas, Dimitris & Manolopoulos, Dimitris, 2019. "Escapism FDI from developed economies: The role of regulatory context and corporate taxation," International Business Review, Elsevier, vol. 28(1), pages 36-47.

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