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FDI spillovers and local productivity growth: evidence from Indian pharmaceutical industry

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  • Pradhan, Jaya Prakash

Abstract

The study tests the FDI spillover hypothesis in the Indian Pharmaceutical industry using an unbalanced panel data for a sample of firms over the period 1989-90 to 2000-01. The study estimates firm-specific productive efficiency growth for domestic firms from frontier production function and relates the same to a set of firm-specific attributes along with the variables of foreign presence. The study found that the presence of foreign firms per se may not be important for productivity growth of domestic firms unless it is complemented by the latter’s R&D activity or size. Therefore, the study concludes that policy efforts to encourage R&D and some concentration of size of the domestic firms in the industry may be more desirable than passively liberalizing the FDI policy from the point of view of increasing productive efficiency of local enterprises.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17080.

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Date of creation: 12 Jul 2004
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Publication status: Published in Artha Vijnana 3-4.XLIV(2002): pp. 317-332
Handle: RePEc:pra:mprapa:17080

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Keywords: FDI; Productivity; Pharmaceutical Industry;

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References

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  3. Blomström, Magnus & Sjöholm, Fredrik, 1998. "Technology, Transfer and Spillovers: Does Local Participation With Multinationals Matter?," CEPR Discussion Papers 2048, C.E.P.R. Discussion Papers.
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Cited by:
  1. 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.

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