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Productivity spillovers from technology transfer to Indian manufacturing firms

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Author Info
Vinish Kathuria (Gujarat Institute of Development Research (GIDR), Gota, Ahmedabad, India)
Abstract

The present paper employs techniques from stochastic production frontier and panel data literature to test a spillover hypothesis for large sized firms that 'presence of foreign-owned firms and foreign technical capital stock in a sector leads to reduced dispersion in efficiency in the sector and fall is higher for the firms that invest in R&D activities'. Dispersion being a relative concept, it may still fall if both the leading foreign firm and domestic firms show fall in technical efficiency over the period and the fall for the leader is higher and vice versa. Given the focus of the study, where concern is for the learning by the domestic firms, the study tries to get around with the problem partially, by testing the hypothesis for those local firms that have shown productivity improvement over the period. Results suggest that foreign-owned firms are close to the frontier in 13 of the total 26 sectors studied. Spillovers result for these 13 sectors indicate that there exist negative spillovers from the presence of foreign firms in the sector, but available foreign technical capital stock has a positive impact. Interesting differences emerge when the sample is bifurcated into scientific and non-scientific subgroups. Results for the scientific subgroup indicate that the indirect gains or spillovers are not automatic consequence of foreign firm's presence, but they depend to a large extent on the efforts of local firms to invest in learning or R&D activities so as to decodify the spilled knowledge. On the other hand, the evidence of spillovers to non-scientific non-FDI firms is not very strong. Copyright © 2000 John Wiley & Sons, Ltd.

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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 12 (2000)
Issue (Month): 3 ()
Pages: 343-369
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Handle: RePEc:wly:jintdv:v:12:y:2000:i:3:p:343-369

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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    Other versions:
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  1. Pradhan, Jaya Prakash, 2004. "FDI spillovers and local productivity growth: evidence from Indian pharmaceutical industry," MPRA Paper 17080, University Library of Munich, Germany. [Downloadable!]
  2. Vidya Mahambare & V. N. Balasubramanyam, 2005. "FDI in India," International Trade 0505007, EconWPA. [Downloadable!]
  3. Blomström, Magnus & Kokko, Ari, 2003. "Human Capital and Inward FDI," CEPR Discussion Papers 3762, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, The European Institute of Japanese Studies.
    Other versions:
  5. Isabel Proença & Maria Paula Fontoura & Nuno Crespo, 2002. "Productivity Spillovers from Multinational Corporations in the Portuguese Case: Evidence from a Short Time Period Panel Data," Working Papers 2002/06, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
  6. VN Balasubramanyam & Vidya Mahambare, 2003. "Foreign direct investment in India," Working Papers 000052, Lancaster University Management School, Economics Department. [Downloadable!]
  7. Lipsey, Robert & Sjöholm, Fredrik, 2004. "Host Country Impacts Of Inward Fdi: Why Such Different Answers?," EIJS Working Paper Series 192, The European Institute of Japanese Studies. [Downloadable!]
  8. Okada, Aya & Siddharthan, N.S., 2007. "Industrial Clusters in India: Evidence from Automobile Clusters in Chennai and the National Capital Region," IDE Discussion Papers 103, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
  9. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Jose Maria Cubillo-Pinilla, 2003. "Entrepreneurship and performance around MNC affiliates," Economics Working Papers we033012, Universidad Carlos III, Departamento de Economía. [Downloadable!]
  11. Galina Hale & Cheryl Long, 2007. "Are there productivity spillovers from foreign direct investment in China?," Working Paper Series 2006-13, Federal Reserve Bank of San Francisco. [Downloadable!]
  12. Sumit Majumdar, 2009. "Technology transfer by foreign firms and the utilization of competencies within Indian industry," The Journal of Technology Transfer, Springer, vol. 34(1), pages 95-117, February. [Downloadable!] (restricted)
  13. Galina Hale & Cheryl Long, 2006. "What Determines Technological Spillovers of Foreign Direct Investment: Evidence from China," Working Papers 934, Economic Growth Center, Yale University. [Downloadable!]
  14. Pradhan, Jaya Prakash, 2006. "Quality of Foreign Direct Investment, Knowledge Spillovers and Host Country Productivity: A Framework of Analysis," MPRA Paper 12336, University Library of Munich, Germany. [Downloadable!]
  15. Mário Augusto Bertella & Gilberto Tadeu Lima, 2003. "Investimento Direto Externo, Acumulação de Capital Produtivo e Distribuição de Renda: uma Abordagem Pós-Keynesiana," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] a06, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  16. Rashmi Banga, 2003. "Diffenentail impact of Japanese and U.S foreign direct invesements on productivity growth- A firm level analysis," Indian Council for Research on International Economic Relations, New Delhi Working Papers 112, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  17. Laura Alfaro & Andrew Charlton, 2007. "Growth and the Quality of Foreign Direct Investment: Is All FDI Equal?," CEP Discussion Papers dp0830, Centre for Economic Performance, LSE. [Downloadable!]
  18. Erol Taymaz & Aykut Lenger, 2004. "Multinational Corporations as a Vehicle for Productivity Spillovers in Turkey," DRUID Working Papers 04-09, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
  19. Aslan, Alper & Kaplan, Muhittin, 2008. "Gumruk Birligi’Nin Firma Verimlilik Yakinsamasina Etkisi
    [The impact of customs union on firm productivity convergence]    ," MPRA Paper 10597, University Library of Munich, Germany. [Downloadable!]
  20. Nuno Crespo & Maria Paula Fontoura, 2005. "Determinant Factors of FDI Spillovers – What Do We Really Know?," Working Papers 2005/06, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
    Other versions:
  21. José Mª. Cubillo Pinilla, 2003. "Market Access Spillovers: An Empirical Approach to the Flagship Firm Effect," Business Economics Working Papers wb032506, Universidad Carlos III, Departamento de Economía de la Empresa. [Downloadable!]
  22. 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. [Downloadable!]
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