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Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector

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  • Sasidharan, Subash

    (Indian Institute of Technology)

Abstract

During the recent period, we observe that many countries compete with each other to attract foreign investment. When MNCs invest in a host country, it is assumed that a part of their technology spills to the host country firms. But the empirical studies on spillover effects of FDI have failed to find robust empirical results about the possibility of positive spillover effects. This study is an attempt to empirically examine the spillover effects from the entry of foreign firms using firm level data of Indian manufacturing industries for the period 1994-2002. We consider both the horizontal and vertical spillover effects of FDI. Consistent with the findings of the previous studies, we find no evidence of significant horizontal spillover effects. In contrast, we find negative vertical spillover effects, although it is not statistically significant.

Suggested Citation

  • Sasidharan, Subash, 2006. "Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector," MERIT Working Papers 2006-010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2006010
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    2. AM.Priyangani Adikari & Haiyun Liu & MMSA. Marasinghe, 2021. "Inward Foreign Direct Investment-Induced Technological Innovation in Sri Lanka? Empirical Evidence Using ARDL Approach," Sustainability, MDPI, vol. 13(13), pages 1-16, June.
    3. Harpreet Dusanjh & A.S. Sidhu, 2009. "Multi-spillover Effects of Multinational Corporations on Host Countries," Global Business Review, International Management Institute, vol. 10(2), pages 243-260, July.
    4. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    5. 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.
    6. Chiara Franco & Subash Sasidharan, 2009. "Fdi, Export Spillover And Firm Heterogeneity - An Application To The Indian Manufacturing Case," Development Research Unit Working Paper Series 06-09, Monash University, Department of Economics.
    7. LEE, Keun & CHOO, Kineung & Yoon, Minho, 2013. "Comparing the Productivity Impacts of Knowledge Spillovers from Network and Arm’s Length Industries:Findings from Business Groups in Korea," IIR Working Paper 13-15, Institute of Innovation Research, Hitotsubashi University.
    8. Ergun Dogan & Koi Nyen Wong & Michael M. C. Yap, 2017. "Vertical and Horizontal Spillovers from Foreign Direct Investment: Evidence from Malaysian Manufacturing," Asian Economic Papers, MIT Press, vol. 16(3), pages 158-183, Fall.
    9. Sofiane Ghali & Sami Rezgui, 2008. "FDI Contribution to Technical Efficiency in the Tunisian Manufacturing Sector," Working Papers 421, Economic Research Forum, revised 06 Jan 2008.
    10. Rituparna Kaushik & Sourabh Bikas Paul, 2021. "Strategic Interactions, Bargaining Power and Stability of Joint Venture in an Emerging Nation," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 543-564, December.
    11. Bishwanath Goldar, 2009. "Impact of Trade on Employment Generation in Manufacturing in India," Trade Working Papers 22921, East Asian Bureau of Economic Research.
    12. Clemente Ruiz Durán, 2014. "Mexico: auto industry and patenting in a technological dependent economy," Chapters, in: Sanghoon Ahn & Bronwyn H. Hall & Keun Lee (ed.), Intellectual Property for Economic Development, chapter 10, pages 240-263, Edward Elgar Publishing.

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    More about this item

    Keywords

    Foreign Direct Investment; Horizontal Spillover; Vertical Spillover; Panel Data;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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