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Local firms productivity spillover from foreign direct investment: a study of Indian manufacturing industries

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  • Smruti Ranjan Behera

Abstract

This paper examines the local firms productivity spillover from foreign direct investment (FDI) based on a cross-industry analysis of Indian manufacturing. The results are based on dynamic panel models and indicate that foreign presence itself raises the local firm's labour productivity within an industry. Nevertheless, the technology spillover is conditioned by the nature of the trade policy regime. We find that after trade policy liberalisation in India, industries which experienced a decline in the tariff cost exhibited stronger growth in domestic firms' labour productivity. A key policy implication is that liberalising the tariff protection could maximise the gains from FDI-technology spillover.

Suggested Citation

  • Smruti Ranjan Behera, 2014. "Local firms productivity spillover from foreign direct investment: a study of Indian manufacturing industries," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 7(2), pages 167-190.
    • Handle: RePEc:ids:ijtlid:v:7:y:2014:i:2:p:167-190
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    Cited by:

    1. Le Thanh Tung, 2019. "Does Foreign Direct Investment Really Support Private Investment in an Emerging Economy? An Empirical Evidence in Vietnam," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 15(1), pages 7-20.
    2. Smruti Ranjan Behera, 2015. "Technology Spillover And Determinants Of Foreign Direct Investment: An Analysis Of Indian Manufacturing Industries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(3), pages 55-83, September.
    3. Guimón, José & Chaminade, Cristina & Maggi, Claudio & Salazar-Elena, Juan Carlos, 2018. "Policies to Attract R&D-related FDI in Small Emerging Countries: Aligning Incentives With Local Linkages and Absorptive Capacities in Chile," Journal of International Management, Elsevier, vol. 24(2), pages 165-178.

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