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Liberalisation and investment: behaviour of MNEs and large corporate firms in India

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  • Siddharthan, N. S.
  • Pandit, B. L.

Abstract

This study examines the impact of the economic liberalisation of the mid-1980s on the investment behaviour of large corporate firms operating in three oligopolistic Indian industries, namely, drugs and pharmaceuticals, chemicals, and industrial machinery. The contrast in investment behaviour between the pre- and the post-liberalisation periods is brought out by the maximum likelihood estimates of the determinants of investment shares of the sample firms for the two periods. The results show that the firm's share in the industry's investment during the industrial licensing regime depended primarily on market share and the firm's ability to pre-empt the licensed capacities. In the post-liberalisation period, capacity creation was fostered by technology imports, expenditures on R&D and product differentiation.

Suggested Citation

  • Siddharthan, N. S. & Pandit, B. L., 1998. "Liberalisation and investment: behaviour of MNEs and large corporate firms in India," International Business Review, Elsevier, vol. 7(5), pages 535-548, October.
  • Handle: RePEc:eee:iburev:v:7:y:1998:i:5:p:535-548
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    References listed on IDEAS

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    3. N. S. Siddharthan & B. L. Pandit, 1992. "Deregulations, Entry and Industrial Performance: The Impact of Recent Indian Policy Changes," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 27, pages 377-384.
    4. Richard J. Gilbert & Marvin Lieberman, 1987. "Investment and Coordination in Oligopolistic Industries," RAND Journal of Economics, The RAND Corporation, pages 17-33.
    5. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
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    7. Siddharthan, N S & Lall, Sanjaya, 1982. "The Recent Growth of the Largest U.S. Multinationals," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 44(1), pages 1-13, February.
    8. Porter, Michael E, 1979. "The Structure within Industries and Companies' Performance," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 214-227, May.
    9. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009 Elsevier.
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    Cited by:

    1. Aggarwal, Aradhna, 2000. "Deregulation, technology imports and in-house R&D efforts: an analysis of the Indian experience," Research Policy, Elsevier, pages 1081-1093.

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