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International Trade, R&D Spillovers and Productivity: Evidence from Indian Manufacturing Industry

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  • Mavannoor Parameswaran

Abstract

This paper examines the effect of trade facilitated R&D spillovers on the productivity of manufacturing firms in India, inter-sectoral variation in the effect on productivity and the importance of firms' investment in R&D, technology imports and plant and machinery in enhancing the productivity effect. Using firm level panel data, the study shows that R&D spillovers have a significant effect on productivity and that this effect is greater in technology-intensive industries. The paper also shows that firms' investment in plant and machinery enhances the productivity effect of R&D spillovers. The paper provides detailed micro-level evidence on the argument that trade openness promotes technological progress in developing countries.

Suggested Citation

  • Mavannoor Parameswaran, 2009. "International Trade, R&D Spillovers and Productivity: Evidence from Indian Manufacturing Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 45(8), pages 1249-1266.
    • Handle: RePEc:taf:jdevst:v:45:y:2009:i:8:p:1249-1266
    DOI: 10.1080/00220380902862911
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    Cited by:

    1. Holger Gorg & Henning Muhlen & Peter Nunnenkamp, 2010. "FDI Liberalisation, Firm Heterogeneity and Foreign Ownership: German Firm Decisions in Reforming India," Journal of Development Studies, Taylor & Francis Journals, vol. 46(8), pages 1367-1384.
    2. Sunitha Raju & V.Raveendra Saradhi, 2019. "Imports from China:Threat or Opportunity Analysis of Indian Manufacturing Sector," Working Papers 1938, Indian Institute of Foreign Trade.
    3. Kawaljeet Kaur & Swati Mehta, 2023. "Modes of Technology Accumulation, Total Factor Productivity and Indian Manufacturing Sector: Firm-Level Analysis," Journal of South Asian Development, , vol. 18(1), pages 7-43, April.
    4. Wang, Fang, 2014. "Complementarities between R&D investment and exporting—Evidence from China," China Economic Review, Elsevier, vol. 31(C), pages 217-227.
    5. Shah, Wasi Ul Hassan & Hao, Gang & Yan, Hong & Yasmeen, Rizwana & Padda, Ihtsham Ul Haq & Ullah, Assad, 2022. "The impact of trade, financial development and government integrity on energy efficiency: An analysis from G7-Countries," Energy, Elsevier, vol. 255(C).
    6. V. Pradeep & Mita Bhattacharya & Jong-Rong Chen, 2017. "Spillover Effects of Research and Development, Exports and Foreign Investment on Productivity," Journal of South Asian Development, , vol. 12(1), pages 18-41, April.
    7. Huang, Junbing & Cai, Xiaochen & Huang, Shuo & Tian, Sen & Lei, Hongyan, 2019. "Technological factors and total factor productivity in China: Evidence based on a panel threshold model," China Economic Review, Elsevier, vol. 54(C), pages 271-285.
    8. Ugur, Mehmet & Churchill, Sefa Awaworyi & Luong, Hoang M., 2020. "What do we know about R&D spillovers and productivity? Meta-analysis evidence on heterogeneity and statistical power," Research Policy, Elsevier, vol. 49(1).
    9. André Klevenhusen & Jonas Coelho & Leo Warszawski & Jorge Moreira & Peter Wanke & João J. Ferreira, 2021. "Innovation Efficiency in OECD Countries: a Non-parametric Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(3), pages 1064-1078, September.
    10. Bhattacharya, Mita & Okafor, Luke Emeka & Pradeep, V., 2021. "International firm activities, R&D, and productivity: Evidence from Indian manufacturing firms," Economic Modelling, Elsevier, vol. 97(C), pages 1-13.
    11. Dai, Xiaoyong & Sun, Zao & Liu, Hang, 2018. "Disentangling the effects of endogenous export and innovation on the performance of Chinese manufacturing firms," China Economic Review, Elsevier, vol. 50(C), pages 42-58.
    12. Seenaiah Kale & Badri Narayan Rath, 2018. "Does Innovation Enhance Productivity In Case Of Selected Indian Manufacturing Firms?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(05), pages 1225-1250, November.
    13. Ketan Reddy & Subash Sasidharan, 2023. "Digitalization and global value chain participation: firm-level evidence from Indian manufacturing," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 551-574, September.
    14. Subash Sasidharan & Ketan Reddy, 2021. "The Role of Digitalisation in Shaping India’s Global Value Chain Participation," Working Papers DP-2021-09, Economic Research Institute for ASEAN and East Asia (ERIA).
    15. Hulya Ulku & Mehmet Pamukcu, 2015. "The impact of R&D and knowledge diffusion on the productivity of manufacturing firms in Turkey," Journal of Productivity Analysis, Springer, vol. 44(1), pages 79-95, August.
    16. Krishan SINGH & Sandeep Kaur BHATIA, 2017. "Whether Fdi Or Exports Enhance Innovation: Evidence From Indian Manufacturing Firms, 2001-2012," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 26(3), pages 19-32.
    17. Reddy, Ketan & Sasidharan, Subash, 2023. "Innovative efforts and export market survival: Evidence from an emerging economy," Technological Forecasting and Social Change, Elsevier, vol. 186(PA).
    18. R. Rijesh, 2021. "Liberalization, Import of Capital Goods, and Industrial Exports: Evidence from Indian Manufacturing Sectors," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 13(1), pages 81-103, January.
    19. Ketan Reddy & Subash Sasidharan & Shandre Thangavelu, 2023. "Does servicification of manufacturing increase the GVC activities of firms? Case of India," The World Economy, Wiley Blackwell, vol. 46(1), pages 153-181, January.
    20. Reddy, Ketan & Sasidharan, Subash & Doytch, Nadia, 2022. "Outward foreign direct investment and domestic innovation efforts: Evidence from India," Journal of Economics and Business, Elsevier, vol. 122(C).
    21. R. Rijesh, 2015. "Technology Import and Manufacturing Productivity in India: Firm Level Analysis," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 411-434, December.
    22. Atsushi Kato, 2009. "Product Market Competition and Productivity in the Indian Manufacturing Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 45(10), pages 1579-1593.
    23. Subash Sasidharan & Ketan Reddy, 2021. "Innovation, Product Sophistication and Export Market Survival: A Study of Indian Manufacturing," Working Papers DP-2021-45, Economic Research Institute for ASEAN and East Asia (ERIA).

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