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Efficiency Spillovers from FDI in the Indian Machinery Industry: A Firm Level Study Using Panel Data Models

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  • Pradeep Kumar Keshari

Abstract

Adopting a micro-level framework of impact of FDI in an industry, this study empirically examines the following three issues in the context of Indian machinery industry (IMI) - division 28 of National Industrial Classification, 2008. First of all, it compares the technical efficiency of foreign affiliates of multinational enterprises (FAs) against the domestic firms (DFs) to know if there are spillovers from MNEs to their affiliates. Secondly, it identifies the differences in the determinants of technical efficiency between FAs and DFs. Finally, it examines the presence (or absence) of efficiency spillovers from FAs to DFs in terms of its two major sources: competition effect and demonstration and imitation effect. To examine these issues, the firm- and year-specific technical efficiency is computed by estimating a stochastic frontier production function with the help of an unbalanced panel of data on a sample of 177 firms for 7 years covering FY 2000/01 to FY 2006/07. Thereafter, the random-effect panel data models of the determinants of firm-level technical efficiency is estmated. URL: [http://fgks.in/IndexServer/tifac/article/139.pdf].

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  • Pradeep Kumar Keshari, 2011. "Efficiency Spillovers from FDI in the Indian Machinery Industry: A Firm Level Study Using Panel Data Models," Working Papers id:4195, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:4195
    Note: Institutional Papers
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    More about this item

    Keywords

    technical efficiency; panel data; manufacturing industry; production function; firms; domestic firms; multinational enterprises; MNEs; Indian; machinery industry; spillovers; industrial;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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