Foreign Direct Investment and R&D: Substitutes or Complements--A Case of Indian Manufacturing after 1991 Reforms
Summary The entry of foreign firms in India since the reforms forces domestic firms to undertake R&D activities or import technology so as to compete with them. This study examines the relationship between FDI and R&D of the domestic firms in the post-liberalization regime. The study uses unbalanced panel data for 1,843 Indian manufacturing firms operating during the period 1994-2005 and corrects for the self-selection problem by using a Heckman-two step procedure. The analysis involving full sample does not give a clear picture of the impact of FDI on the innovation strategies of domestic firms. Interesting results emerge, when analysis is carried out according to different sub-samples--based on foreign-ownership and technology intensity of the industry. FDI and R&D are found to be complements when sample is divided on the bases of equity ownership. FDI inflow induces foreign-owned firms in high tech industries and firms in minority ownership to invest in R&D.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Katrak, Homi, 1985. "Imported Technology, Enterprise Size and R&D in a Newly Industrializing Country: The Indian Experience," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 47(3), pages 213-29, August.
- Un, C. Annique & Cuervo-Cazurra, Alvaro, 2008. "Do subsidiaries of foreign MNEs invest more in R&D than domestic firms?," Research Policy, Elsevier, vol. 37(10), pages 1812-1828, December.
- Nelson, Richard R & Pack, Howard, 1999.
"The Asian Miracle and Modern Growth Theory,"
Royal Economic Society, vol. 109(457), pages 416-36, July.
- Richard Nelson, 2004. "The challenge of building an effective innovation system for catch-up," Oxford Development Studies, Taylor & Francis Journals, vol. 32(3), pages 365-374.
- Vinish Kathuria, 2001. "Foreign firms, technology transfer and knowledge spillovers to Indian manufacturing firms: a stochastic frontier analysis," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 625-642.
- Deolalikar, Anil B & Evenson, Robert E, 1989.
"Technology Production and Technology Purchase in Indian Industry: An Econometric Analysis,"
The Review of Economics and Statistics,
MIT Press, vol. 71(4), pages 689-92, November.
- Deolalikar, A.B. & Evenson, R.E., 1988. "Technology Production And Technology Purchase In Indian Industry: An Econometric Analysis," Papers 556, Yale - Economic Growth Center.
- Basant, Rakesh, 1997. "Technology strategies of large enterprises in Indian industry: Some explorations," World Development, Elsevier, vol. 25(10), pages 1683-1700, October.
- Katrak, Homi, 1989. "Imported technologies and R&D in a newly industrialising country : The experience of Indian enterprises," Journal of Development Economics, Elsevier, vol. 31(1), pages 123-139, July.
- Vinish Kathuria, 2002. "Liberalisation, FDI, and productivity spillovers--an analysis of Indian manufacturing firms," Oxford Economic Papers, Oxford University Press, vol. 54(4), pages 688-718, October.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Paul Romer, 1989.
"Endogenous Technological Change,"
NBER Working Papers
3210, National Bureau of Economic Research, Inc.
- Eiichi Tomiura, 2003. "Firm-Level Relationship between Technological Capability and Foreign Direct Investment," Discussion Paper Series 138, Research Institute for Economics & Business Administration, Kobe University.
- Katrak, Homi, 1997. "Developing countries' imports of technology, in-house technological capabilities and efforts: an analysis of the Indian experience," Journal of Development Economics, Elsevier, vol. 53(1), pages 67-83, June.
- Vinish Kathuria, 2000. "Productivity spillovers from technology transfer to Indian manufacturing firms," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 343-369.
- Holger Görg & David Greenaway, 2004.
"Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?,"
World Bank Research Observer,
World Bank Group, vol. 19(2), pages 171-197.
- Görg, Holger & Greenaway, David, 2003. "Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," IZA Discussion Papers 944, Institute for the Study of Labor (IZA).
- Pack, Howard & Saggi, Kamal, 1997. "Inflows of Foreign Technology and Indigenous Technological Development," Review of Development Economics, Wiley Blackwell, vol. 1(1), pages 81-98, February.
- Theodore H. Moran, 1998. "Foreign Direct Investment and Development: The New Policy Agenda for Developing Countries and Economies in Transition," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 53.
- Aradhna Aggarwal, 2007.
"Liberalisation, Multinational Enterprises and Export Performance: Evidence from Indian Manufacturing,"
- A. Aggarwal, 2002. "Liberalisation, Multinational Enterprises and Export Performance: Evidence from Indian Manufacturing," Journal of Development Studies, Taylor & Francis Journals, vol. 38(3), pages 119-137.
- Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
- Nelson, Richard R. & Wolff, Edward N., 1997.
"Factors behind cross-industry differences in technical progress,"
Structural Change and Economic Dynamics,
Elsevier, vol. 8(2), pages 205-220, June.
- Nelson, R.R. & Wolff, E.N., 1992. "Factors Behind Cross-Industry Differences in Technical Progress," Working Papers 92-27, C.V. Starr Center for Applied Economics, New York University.
- Paul Krugman, 1990.
"Increasing Returns and Economic Geography,"
NBER Working Papers
3275, National Bureau of Economic Research, Inc.
- Theodore H. Moran & Edward M. Graham & Magnus Blomstrom, 2005. "Does Foreign Direct Investment Promote Development?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3810.
- Bertschek, Irene, 1995. "Product and Process Innovation as a Response to Increasing Import and Foreign Direct Investment," Journal of Industrial Economics, Wiley Blackwell, vol. 43(4), pages 341-57, December.
- Mytelka, Lynn Krieger, 1978. "Licensing and technology dependence in the Andean group," World Development, Elsevier, vol. 6(4), pages 447-459, April.
- Amemiya, Takeshi, 1984. "Tobit models: A survey," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 3-61.
- Fan, C. Simon & Hu, Yifan, 2007. "Foreign direct investment and indigenous technological efforts: Evidence from China," Economics Letters, Elsevier, vol. 96(2), pages 253-258, August.
- Stewart, Frances & Ghani, Ejaz, 1991. "How significant are externalities for development?," World Development, Elsevier, vol. 19(6), pages 569-594, June.
- Yih-Chyi Chuang & Chi-Mei Lin, 1999. "Foreign direct investment, R&D and spillover efficiency: Evidence from Taiwan's manufacturing firms," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 117-137.
- Braga, Helson & Willmore, Larry, 1991. "Technological Imports and Technological Effort: An Analysis of Their Determinants in Brazilian Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 421-32, June.
- Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
- Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September.
When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:39:y:2011:i:7:p:1226-1239. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.