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FDI Liberalisation, Firm Heterogeneity and Foreign Ownership: German Firm Decisions in Reforming India

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  • Holger Gorg
  • Henning Muhlen
  • Peter Nunnenkamp

Abstract

The paper investigates the role of firm-level productivity and industry-level R&D for multinational enterprises' (MNEs') choice of undertaking foreign direct investment (FDI), and the share of ownership in foreign affiliates. Two firm-specific datasets on German MNEs with varying equity stakes in Indian affiliates are used to account for the two-step decision process. The paper also analyses how German firm decisions were affected by the liberalisation of FDI regulations in India. Results show remarkable differences between the selection and the ownership share equation, and also between the pre-reform and post-reform periods. The evidence clearly reveals the trade-offs involved in selective FDI approvals and foreign ownership restrictions.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 46 (2010)
Issue (Month): 8 ()
Pages: 1367-1384

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Handle: RePEc:taf:jdevst:v:46:y:2010:i:8:p:1367-1384

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References

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  17. Kalpana Kochhar & Utsav Kumar & Raghuram Rajan & Arvind Subramanian, 2006. "India's Patterns of Development: What Happened, What Follows," NBER Working Papers 12023, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Mühlen, Henning & Görg, Holger & Nunnenkamp, Peter, 2010. "Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic," Open Access Publications from Kiel Institute for the World Economy 37268, Kiel Institute for the World Economy (IfW).
  2. Axel Dreher & Peter Nunnenkamp & Krishna Chaitanya Vadlamannati, 2011. "The Role of Country-of-origin Characteristics for Foreign Direct Investment and Technical Cooperation in Post-reform India," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 81, Courant Research Centre PEG.
  3. Wan-Hsin LIU & Peter Nunnenkamp, 2009. "Domestic Repercussions of Different Types of FDI: Firm-level Evidence for Taiwanese Manufacturing," Kiel Working Papers 1546, Kiel Institute for the World Economy.
  4. Frank Bickenbach & Wan-Hsin Liu & Peter Nunnenkamp, 2013. "Regional Concentration of FDI in Post-reform India: A District-level Analysis," Kiel Working Papers 1854, Kiel Institute for the World Economy.
  5. Peter Nunnenkamp & Maximiliano Sosa Andrés, 2013. "Ownership Choices of Indian Direct Investors: Do FDI Determinants Differ between Joint Ventures and Wholly-owned Subsidiaries?," Kiel Working Papers 1841, Kiel Institute for the World Economy.

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