IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/37759.html
   My bibliography  Save this paper

Spill-over effects of foreign direct investment: an econometric study of Indian firms

Author

Listed:
  • Bikash Ranjan Mishra, Dr.

Abstract

The channel through which the inflows of foreign direct investment (FDI) contribute to economic progress of the host economy like India can both be direct as well as indirect. Such pecuniary benefits resulting in improved productivity of local firms which cannot be fully appropriated by foreign investors are better known in the literature as spill-over effects. The paper is based on the following research question: what are the firm-level direct impact and indirect effects of FDI in India? This question is analysed with reference to a micro-level investigation which tests particularly for inter- and intra-industrial spill-overs from FDI by applying a Panel framework with Levinsohn-Petrin approach. The study envelops a rich firm-level dataset from 22 sectors of Indian Manufacturing industries and over a time period from 2006 to 2010. After controlling for firm-wise and year-wise effects, the paper finds marginal and insignificant direct impact and mixed spill-over effects of FDI inflow on the productivity of local firms.

Suggested Citation

  • Bikash Ranjan Mishra, Dr., 2011. "Spill-over effects of foreign direct investment: an econometric study of Indian firms," MPRA Paper 37759, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37759
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/37759/1/MPRA_paper_37759.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Brian J. Aitken & Ann E. Harrison, 2022. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 6, pages 139-152, World Scientific Publishing Co. Pte. Ltd..
    2. repec:bla:manchs:v:69:y:2001:i:1:p:103-19 is not listed on IDEAS
    3. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    4. David L. Carr & James R. Markusen & Keith E. Maskus, 2021. "Estimating The Knowledge-Capital Model of the Multinational Enterprise," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 5, pages 95-110, World Scientific Publishing Co. Pte. Ltd..
    5. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Foreign Direct Investment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59861-4, October.
    6. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    7. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    8. Blomstrom, Magnus & Lipsey, Robert E., 1986. "Firm Size and Foreign Direct Investment," Working Papers 86-34, C.V. Starr Center for Applied Economics, New York University.
    9. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bishwanath Goldar & Karishma Banga, 2018. "Country Origin of Foreign Direct Investment in Indi an Manufacturing and Its Impact on Productivity of Domestic Firms," Working Papers id:12730, eSocialSciences.
    2. Ebghaei, Felor, 2015. "Yabancı İştirakli Firmaların İhracat Yöneliminin Doğrudan Yabancı Sermaye Yatırımlarının Dikey Yayılmaları Üzerindeki Etkileri: Türkiye İmalat Sanayi Örneği [Effect of Firm’s Export-Orienteation on," MPRA Paper 77893, University Library of Munich, Germany, revised Mar 2017.
    3. Abeba Nigussie Turi, 2015. "Productivity Spillovers from Foreign Direct Investment: The Case of Ethiopia," Working Papers IES 2015/29, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2015.
    4. Ebghaei, Felor & Akkoyunlu Wigley, Arzu, 2015. "Yabancı İştirakli Firmaların İhracat Yöneliminin Doğrudan Yabancı Sermaye Yatırımlarının Dikey Yayılmaları Üzerindeki Etkileri: Türkiye İmalat Sanayi Örneği [Effect of Firm’s Export-Orienteation on," MPRA Paper 77954, University Library of Munich, Germany, revised Mar 2017.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammed BENLI, 2016. "Productivity spillovers from FDI in Turkey: Evidence from quantile regressions," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 177-196, Autumn.
    2. Tian, Xiaowen, 2010. "Managing FDI technology spillovers: A challenge to TNCs in emerging markets," Journal of World Business, Elsevier, vol. 45(3), pages 276-284, July.
    3. Muhammed BENLI, 2016. "Productivity spillovers from FDI in Turkey: Evidence from quantile regressions," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(608), A), pages 177-196, Autumn.
    4. Chun-Hung Lin & Chia-Ming Lee & Chih-Hai Yang, 2011. "Does foreign direct investment really enhance China's regional productivity?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(6), pages 741-768, August.
    5. Wang, Jian & Wang, Xiao, 2015. "Benefits of foreign ownership: Evidence from foreign direct investment in China," Journal of International Economics, Elsevier, vol. 97(2), pages 325-338.
    6. Santos, Eleonora, 2017. "Assessing the Impact of Foreign Direct Investment on Domestic Manufacturing Firms’ Productivity: A Database for Portugal," MPRA Paper 88959, University Library of Munich, Germany.
    7. Pierre Blanchard & Claude Mathieu, 2016. "Multinationals and domestic firms in France: who gains from knowledge spillovers?," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(2), pages 109-125, September.
    8. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
    9. Jan Hagemejer & Marcin Kolasa, 2011. "Internationalisation and Economic Performance of Enterprises: Evidence from Polish Firm‐level Data," The World Economy, Wiley Blackwell, vol. 34(1), pages 74-100, January.
    10. Priit Vahter & Jaan Masso, 2007. "Home versus Host Country Effects of FDI: Searching for New Evidence of Productivity Spillovers," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(2), pages 165-196.
    11. Luosha Du & Ann Harrison & Gary Jefferson, 2022. "FDI Spillovers and Industrial Policy: The Role of Tariffs and Tax Holidays," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 9, pages 215-232, World Scientific Publishing Co. Pte. Ltd..
    12. Jitao Tang & Rosanne Altshuler, 2015. "The Spillover Effects Of Outward Foreign Direct Investment On Home Countries: Evidence From The United States," Departmental Working Papers 201501, Rutgers University, Department of Economics.
    13. Beugelsdijk, Sjoerd & Smeets, Roger & Zwinkels, Remco, 2008. "The impact of horizontal and vertical FDI on host's country economic growth," International Business Review, Elsevier, vol. 17(4), pages 452-472, August.
    14. Shandre Mugan Thangavelu, . "Globalization and Performance of Small and Large Firm: Case of Vietnamese Firms," Chapters, in: Chin Hee Hahn & Dionisius A. Narjoko (ed.), Globalization and Performance of Small and Large Firms, chapter 10, pages X-1 - X-3, Economic Research Institute for ASEAN and East Asia (ERIA).
    15. Shandre M. Thangavelu & Sanja Samirana Pattnayak, 2006. "Linkages and Spillovers from Foreign Ownership in the Indian Pharmaceutical Firms," SCAPE Policy Research Working Paper Series 0605, National University of Singapore, Department of Economics, SCAPE.
    16. Akinori Tomohara & Kazuhiko Yokota, 2013. "Who Gains from Foreign Direct Investment-Induced Technology Spillovers? Horizontal and Vertical Linkages," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(3), pages 312-324, September.
    17. Harris, Richard & Moffat, John, 2011. "Plant-level determinants of total factor productivity in Great Britain, 1997-2006," LSE Research Online Documents on Economics 33561, London School of Economics and Political Science, LSE Library.
    18. Smeets, Roger & de Vaal, Albert, 2016. "Intellectual Property Rights and the productivity effects of MNE affiliates on host-country firms," International Business Review, Elsevier, vol. 25(1), pages 419-434.
    19. Shandre M. Thangavelu & Sanja Samirana Pattnayak, 2006. "Linkages and Spillovers from Foreign Ownership in the Indian Pharmaceutical Firms," Development Economics Working Papers 22579, East Asian Bureau of Economic Research.
    20. Ni, Bin & Spatareanu, Mariana & Manole, Vlad & Otsuki, Tsunehiro & Yamada, Hiroyuki, 2017. "The origin of FDI and domestic firms’ productivity—Evidence from Vietnam," Journal of Asian Economics, Elsevier, vol. 52(C), pages 56-76.

    More about this item

    Keywords

    FDI; spill-over effects; panel data; Levinsohn-Petrin approach;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:37759. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.