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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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  1. Caves, Richard E, 1974. "Multinational Firms, Competition, and Productivity in Host-Country Markets," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 41(162), pages 176-93, May.
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  9. Fredrik Sjoholm, 1999. "Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(1), pages 53-73.
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  13. V N Balasubramanyam & V Mahambare, 2003. "Foreign direct investment in India," Working Papers, Lancaster University Management School, Economics Department 539987, Lancaster University Management School, Economics Department.
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  17. Blyde, Juan & Kugler, Maurice & Stein, Ernesto, 2004. "Exporting vs. outsourcing by MNC subsidiaries: which determines FDI spillovers?," Discussion Paper Series In Economics And Econometrics, Economics Division, School of Social Sciences, University of Southampton 0411, Economics Division, School of Social Sciences, University of Southampton.
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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, Institute of Innovation Research, Hitotsubashi University 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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