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Does FDI Induce Knowledge Spillovers? Evidence from Indian Pharmaceutical Industry

In: Studies in International Economics and Finance

Author

Listed:
  • Ramesh Jangili

    (Reserve Bank of India)

  • N. R. V. V. M. K. Rajendra Kumar

    (Reserve Bank of India)

  • N. Srinivasa Rao

    (Ministry of Rural Development, Government of India)

Abstract

The study examines knowledge spillovers from multinational firms in the pharmaceutical industry in India. Specifically, we examine if FDI catalyses diffusion of knowledge transfer from multinational firms’ R&D activities during 2000–01 to 2019–20 and four sub-periods of five years each. The empirical evidence suggests that multinational firms do not have an impact on the output of domestic firms in the first two sub-periods. However, generate positive knowledge spillovers in the last two sub-periods, increasing the output of domestic firms. FDI flows in the pharmaceutical sector increased mainly in the last two sub-periods due to policy changes and more relaxed FDI norms. The study finds that the competition effect exists and distinguishes domestic firms. Firms not investing in R&D face enhanced competition from firms investing in R&D activities.

Suggested Citation

  • Ramesh Jangili & N. R. V. V. M. K. Rajendra Kumar & N. Srinivasa Rao, 2022. "Does FDI Induce Knowledge Spillovers? Evidence from Indian Pharmaceutical Industry," India Studies in Business and Economics, in: Naoyuki Yoshino & Rajendra N. Paramanik & Anoop S. Kumar (ed.), Studies in International Economics and Finance, pages 235-251, Springer.
    • Handle: RePEc:spr:isbchp:978-981-16-7062-6_13
    DOI: 10.1007/978-981-16-7062-6_13
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