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Foreign firms, technology transfer and knowledge spillovers to Indian manufacturing firms: a stochastic frontier analysis

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  • Vinish Kathuria
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    Abstract

    This paper uses techniques from a stochastic production frontier (i.e., the best practice technology used in the industry vis-a-vis average practised technology) and panel data literature to test for the spillover hypothesis that 'presence of foreign-owned firms and disembodied technology import in a sector leads to higher productivity growth for domestic firms'. The study uses panel data for 368 medium and largesized Indian manufacturing firms for the period 1975-1976 to 1988-1989. The results indicate that there exists positive spillovers from the presence of foreign-owned firms but the nature and type of spillovers vary depending upon the industries to which the firms' belong. There exist significant positive spillovers for the domestic firms belonging to the 'scientific' subgroup provided the firms themselves possess significant R&D capabilities. However, for the 'non-scientific' subgroup presence of foreign firms itself forces the local firms to be more productive by inducing greater competition. However, the results change marginally when the initial level of productivity (i.e. the technology-gap) is considered.

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    Bibliographic Info

    Article provided by Taylor and Francis Journals in its journal Applied Economics.

    Volume (Year): 33 (2001)
    Issue (Month): 5 ()
    Pages: 625-642

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    Handle: RePEc:taf:applec:v:33:y:2001:i:5:p:625-642

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    Cited by:
    1. Uppenberg, Kristian & Riess, Armin, 2004. "Determinants and growth effects of foreign direct investment," EIB Papers 3/2004, European Investment Bank, Economics Department.
    2. Constantina Kottaridi & Thanasis Stengos, 2008. "Foreign Direct Investment, human capital and non-linearities in economic growth," Working Papers 019, University of Peloponnese, Department of Economics.
    3. Crespo, Nuno & Fontoura, Maria Paula, 2007. "Determinant Factors of FDI Spillovers - What Do We Really Know?," World Development, Elsevier, vol. 35(3), pages 410-425, March.
    4. Blomström, Magnus & Kokko, Ari, 2003. "Human Capital and Inward FDI," EIJS Working Paper Series 167, The European Institute of Japanese Studies.
    5. Sasidharan, Subash & Kathuria, Vinish, 2011. "Foreign Direct Investment and R&D: Substitutes or Complements--A Case of Indian Manufacturing after 1991 Reforms," World Development, Elsevier, vol. 39(7), pages 1226-1239, July.
    6. Mita Bhattacharya & Jong-Rong Chen & V. Pradeep Author-X-Name- V, 2008. "Productivity Spillovers In Indian Manufacturing Firms," Monash Economics Working Papers 30/08, Monash University, Department of Economics.

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