IDEAS home Printed from https://ideas.repec.org/a/eme/jespps/v38y2011i3p275-286.html
   My bibliography  Save this article

Linkages and technology spillovers in the presence of foreign firms: Evidence from the Indian pharmaceutical industry

Author

Listed:
  • Sanja Samirana Pattnayak
  • Shandre M. Thangavelu

Abstract

Purpose - This paper aims to examine production linkage and technology spillovers due to the presence of foreign firms in the Indian pharmaceutical industry. Design/methodology/approach - This study employs the semi-parametric estimation method suggested by Olley and Pakes to control for unobserved firm heterogeneity that accounts for the endogeneity of input selection with respect to productivity. Findings - The results suggest that R&D activities of foreign firms lead to positive technology spillover to local firms. However, we also found negative linkage from the activities of foreign firms. The negative linkage could be explained by the large reverse engineering activities that occur on existing drugs in the Indian pharmaceutical industry, where the enclave activities of foreign firms might be a preemptive strategy to reduce the flow of technologies to downstream local firms and to protect their firm-specific (product) technology. Originality/value - The results provide support for strong institutional arrangements such as giving protection for Intellectual Property Rights, which might be important for attracting and creating linkages with activities of foreign firms in the host country.

Suggested Citation

  • Sanja Samirana Pattnayak & Shandre M. Thangavelu, 2011. "Linkages and technology spillovers in the presence of foreign firms: Evidence from the Indian pharmaceutical industry," Journal of Economic Studies, Emerald Group Publishing, vol. 38(3), pages 275-286, August.
  • Handle: RePEc:eme:jespps:v:38:y:2011:i:3:p:275-286
    as

    Download full text from publisher

    File URL: http://www.emeraldinsight.com/10.1108/01443581111152391?utm_campaign=RePEc&WT.mc_id=RePEc
    Download Restriction: Access to full text is restricted to subscribers

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, pages 323-351.
    2. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    3. Arvanitidis, Paschalis & Petrakos, George & Pavleas, Sotiris, 2007. "Determinants of economic growth: the experts’ view," Papers DYNREG20, Economic and Social Research Institute (ESRI).
    4. Ron Martin, 2001. "EMU versus the regions? Regional convergence and divergence in Euroland," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 51-80, January.
    5. Damien Neven & Claudine Gouymte, 1995. "Regional Convergence in the European Community," Journal of Common Market Studies, Wiley Blackwell, vol. 33(1), pages 47-65, March.
    6. Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
    7. Strazicich, Mark C. & Lee, Junsoo & Day, Edward, 2004. "Are incomes converging among OECD countries? Time series evidence with two structural breaks," Journal of Macroeconomics, Elsevier, pages 131-145.
    8. Folster, Stefan & Henrekson, Magnus, 1999. "Growth and the public sector: a critique of the critics," European Journal of Political Economy, Elsevier, pages 337-358.
    9. Sergiu Hart & Andreu Mas-Colell, 2000. "A Simple Adaptive Procedure Leading to Correlated Equilibrium," Econometrica, Econometric Society, pages 1127-1150.
    10. Andres RodrIguez-Pose & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor & Francis Journals, pages 97-113.
    11. Raffaele Paci, 1997. "More similar and less equal: Economic growth in the European regions," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 609-634.
    12. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, pages 178-183.
    13. Michael Lee & Ritchard Longmire & Laszlo Matyas & Mark Harris, 1998. "Growth convergence: some panel data evidence," Applied Economics, Taylor & Francis Journals, vol. 30(7), pages 907-912.
    14. de la Fuente, A., 1995. "Catch-up, Growth and Convergence in the OECD," UFAE and IAE Working Papers 314.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    15. Matthew Cole & Eric Neumayer, 2003. "The pitfalls of convergence analysis: is the income gap really widening?," Applied Economics Letters, Taylor & Francis Journals, vol. 10(6), pages 355-357.
    16. Grier, Kevin B. & Tullock, Gordon, 1989. "An empirical analysis of cross-national economic growth, 1951-1980," Journal of Monetary Economics, Elsevier, pages 259-276.
    17. Button, Kenneth J & Pentecost, Eric J, 1995. "Testing for Convergence of the EU Regional Economies," Economic Inquiry, Western Economic Association International, vol. 33(4), pages 664-671, October.
    18. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, pages 141-163.
    19. Baumol, William J., 1985. "Productivity Growth, Convergence and Welfare: What the Long Run Data Show," Working Papers 85-27, C.V. Starr Center for Applied Economics, New York University.
    20. Leamer, Edward E, 1985. "Sensitivity Analyses Would Help," American Economic Review, American Economic Association, pages 308-313.
    21. Adriana Di Liberto & James Symons, 2003. "Some Econometric Issues in Convergence Regressions," Manchester School, University of Manchester, vol. 71(3), pages 293-307, June.
    22. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, pages 1072-1085.
    23. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
    24. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, pages 178-183.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jespps:v:38:y:2011:i:3:p:275-286. 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: (Virginia Chapman). General contact details of provider: http://www.emeraldinsight.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.