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Impact of Trade Liberalization on Foreign Direct Investment in Indian Industries

Author

Listed:
  • Bishwanath Goldar
  • Rashmi Banga

    (University of Delhi Enclave)

Abstract

The paper undertakes analyses at three levels and the results arrived at different levels indicate that trade liberalization has had a favourable effect on FDI flows in India. It is also found that the regions having greater extent of international trade are able to attract greater amount of FDI. Some evidence is found that point to differential effects of trade associated with international vertical integration and intra-industry trade. Though liberalization has led to a substantial increase in intra-industry trade, much of the intra-industry being horizontal in nature in India is not found to have a strong favourable effect on FDI.

Suggested Citation

  • Bishwanath Goldar & Rashmi Banga, 2007. "Impact of Trade Liberalization on Foreign Direct Investment in Indian Industries," Working Papers 3607, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    • Handle: RePEc:esc:wpaper:3607
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    File URL: http://www.unescap.org/tid/artnet/pub/wp3607.pdf
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    References listed on IDEAS

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    1. C. Veeramani, 2007. "Industry-Specific Determinants of Intra-Industry Trade in India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 42(2), pages 211-229, December.
    2. Eaton Jonathan & Tamura Akiko, 1994. "Bilateralism and Regionalism in Japanese and U.S. Trade and Direct Foreign Investment Patterns," Journal of the Japanese and International Economies, Elsevier, vol. 8(4), pages 478-510, December.
    3. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    4. Bishwanath GOLDAR & Suresh Chand AGGARWAL, 2005. "Trade Liberalization And Price-Cost Margin In Indian Industries," The Developing Economies, Institute of Developing Economies, vol. 43(3), pages 346-373, September.
    5. James R. Markusen & Keith E. Maskus, 2001. "A Unified Approach to Intra-Industry Trade and Direct Foreign Investment," NBER Working Papers 8335, National Bureau of Economic Research, Inc.
    6. P. J. Lloyd & Hyun-Hoon Lee (ed.), 2002. "Frontiers of Research in Intra-Industry Trade," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28598-9, December.
    7. Edmar L. Bacha (ed.), 1994. "Economics in a Changing World," International Economic Association Series, Palgrave Macmillan, number 978-1-349-23458-5.
    8. Wilfred J. Ethier, 1994. "Multinational Firms in the Theory of International Trade," International Economic Association Series, in: Edmar L. Bacha (ed.), Economics in a Changing World, chapter 1, pages 3-33, Palgrave Macmillan.
    9. James R. Markusen & Keith E. Maskus, 2002. "A Unified Approach to Intra-Industry Trade and Foreign Direct Investment," Palgrave Macmillan Books, in: P. J. Lloyd & Hyun-Hoon Lee (ed.), Frontiers of Research in Intra-Industry Trade, chapter 11, pages 199-219, Palgrave Macmillan.
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    Citations

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    Cited by:

    1. Mumtaz Hussain Shah & Yahya Khan, 2016. "Trade Liberalisation and FDI Inflows in Emerging Economies," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 8(1), pages 35-52, April.
    2. Mumtaz Hussain Shah & Anum Gul Afridi, 2015. "Significance of Good Governance for FDI Inflows in SAARC Countries," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 7(2), pages 31-52, October.
    3. Gourab Chakraborty, 2018. "Sub-National Location Determinants of Inward Foreign Direct Investment: A Statistical Appraisal Across Regions in India," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(8), pages 1026-1041, August.
    4. Mumtaz Hussain Shah & Saba Qayyum, 2015. "Impact of Double Taxation Treaties on Inward FDI in Latin American and Caribbean Developing Countries," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 7(1), pages 1-18, April.
    5. Makun, Keshmeer Kanewar, 2016. "Direct Foreign Investment and its Determinants: A Case Study - Gli investimenti diretti esteri e loro determinanti : studio di un caso," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 69(2), pages 151-174.
    6. Dongre, Anil P., 2012. "Policy changes in the wake of globalization and its impact on Indian industries," Journal of Policy Modeling, Elsevier, vol. 34(3), pages 476-496.
    7. Anil K. Lal, 2017. "Foreign Direct Investment, Trade Openness And Gdp In China, India And Mexico," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(05), pages 1059-1076, December.
    8. L.G. Burange & Pooja Thakur & Hemangi K. Kelkar, 2017. "Foreign Direct Investment and Intra-industry Trade in India’s Manufacturing Sector," Foreign Trade Review, , vol. 52(4), pages 203-218, November.
    9. Rana Ejaz Ali Khan & Qazi Muhammad Adnan Hye, 2014. "Foreign direct investment and liberalization policies in Pakistan: An empirical analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-12, December.

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    More about this item

    Keywords

    Trade Liberalization; Foreign Direct Investmetn; India; Indian Industries;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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