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Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector

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  • Sasidharan, Subash

    ()
    (Indian Institute of Technology)

Abstract

During the recent period, we observe that many countries compete with each other to attract foreign investment. When MNCs invest in a host country, it is assumed that a part of their technology spills to the host country firms. But the empirical studies on spillover effects of FDI have failed to find robust empirical results about the possibility of positive spillover effects. This study is an attempt to empirically examine the spillover effects from the entry of foreign firms using firm level data of Indian manufacturing industries for the period 1994-2002. We consider both the horizontal and vertical spillover effects of FDI. Consistent with the findings of the previous studies, we find no evidence of significant horizontal spillover effects. In contrast, we find negative vertical spillover effects, although it is not statistically significant.

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Bibliographic Info

Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 010.

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Date of creation: 2006
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Handle: RePEc:unm:unumer:2006010

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Keywords: Foreign Direct Investment; Horizontal Spillover; Vertical Spillover; Panel Data;

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References

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  8. Costa, Ionara & de Queiroz, Sergio Robles Reis, 2002. "Foreign direct investment and technological capabilities in Brazilian industry," Research Policy, Elsevier, vol. 31(8-9), pages 1431-1443, December.
  9. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," Working Paper Series in Economics and Finance 99, Stockholm School of Economics.
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  18. Davide Castellani & Antonello Zanfei, 2003. "Technology gaps, absorptive capacity and the impact of inward investments on productivity of European firms ," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(6), pages 555-576.
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Cited by:
  1. LEE, Keun & CHOO, Kineung & Yoon, Minho, 2013. "Comparing the Productivity Impacts of Knowledge Spillovers from Network and Arm’s Length Industries:Findings from Business Groups in Korea," IIR Working Paper 13-15, Institute of Innovation Research, Hitotsubashi University.
  2. Bishwanath Goldar, 2009. "Impact of Trade on Employment Generation in Manufacturing in India," Trade Working Papers 22921, East Asian Bureau of Economic Research.

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