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Is the evolution of India’s Outward FDI consistent with Dunning’s Investment Development Path sequence?

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  • Swati Virmani
  • Edmund Amann

Abstract

This paper examines whether India’s Outward Foreign Direct Investment (OFDI) pattern is consistent with Dunning’s Investment Development Path (IDP) sequence using macro data over the period 1980-2010. We test whether the level of development - proxied by GDP per capita - is the main factor explaining OFDI, and augment the IDP by studying other major determinants such as Exports, Inward FDI (IFDI), Human Capital, and R&D using the Cointegration and Error Correction Model techniques. Our results support the main proposition of the IDP, but also highlight the importance of other factors. We also find that OFDI Granger-causes R&D, suggesting a possibility of reverse technology spillover.

Suggested Citation

  • Swati Virmani & Edmund Amann, 2015. "Is the evolution of India’s Outward FDI consistent with Dunning’s Investment Development Path sequence?," Working Papers 92160912, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:92160912
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    References listed on IDEAS

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    1. Nayyar, Rishika & Mukherjee, Jaydeep, 2020. "Home country impact on Outward FDI from India," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 385-400.
    2. Justice G. Djokoto & Paragon Pomeyie, 2021. "Level of Income and the Investment Development Path Theory: Evidence From Africa," SAGE Open, , vol. 11(4), pages 21582440211, November.
    3. Pragyanrani Behera & Prajukta Tripathy & Bikash Ranjan Mishra, 2021. "The Directionality of Outward FDI and Its Determinants - Findings From Asian Emerging Countries," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 3(Early Vie), pages 1-6.

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    More about this item

    Keywords

    Outward FDI; Investment Development Path; Error Correction Model; Granger Causality; Reverse Technology Spillovers;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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