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What drives India's outward FDI?

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  • Nunnenkamp, Peter
  • Sosa Andrés, Maximiliano
  • Vadlamannati, Krishna Chaitanya
  • Waldkirch, Andreas

Abstract

We empirically assess the determinants of India's FDI outflows across a large sample of host countries in the 1996-2009 period. Based on gravity model specifications, we employ Poisson pseudo maximum likelihood (PPML) estimators. Major findings include: India's outward FDI is hardly affected by motives to access raw materials or superior technologies. Market-related factors appear to have dominated the location choices of Indian direct investors. A larger Indian diaspora in the host countries attracts more FDI. Finally, it seems that Indian direct investors are relatively resilient to weak institutions and economic instability in the host countries. However, we do not find robust evidence that India provides an alternative source of FDI for countries that traditional investors tend to avoid.

Suggested Citation

  • Nunnenkamp, Peter & Sosa Andrés, Maximiliano & Vadlamannati, Krishna Chaitanya & Waldkirch, Andreas, 2012. "What drives India's outward FDI?," Kiel Working Papers 1800, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1800
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    4. Alicia Garcia-Herrero & Sumedh Deorukhkar, 2014. "What explains India s surge in outward direct investment?," Working Papers 1416, BBVA Bank, Economic Research Department.
    5. Wladimir Andreff, 2014. "Outward foreign direct investment by Brazilian and Indian multinational companies: comparison with Russian-Chinese multinationals," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01279896, HAL.
    6. Wladimir Andreff, 2016. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01342391, HAL.
    7. Kottaridi, Constantina & Giakoulas, Dimitris & Manolopoulos, Dimitris, 2019. "Escapism FDI from developed economies: The role of regulatory context and corporate taxation," International Business Review, Elsevier, vol. 28(1), pages 36-47.

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    More about this item

    Keywords

    FDI outflows; gravity model; PPML; India;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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