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An Analysis of Productivity Spillovers from Foreign Direct Investment in India’s Services Sector

Author

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  • Pooja Thakur
  • L.G. Burange

Abstract

The paper tries to study productivity spillovers from foreign direct investment in the services sector of India. Using firm-level data for the period 2000–2010, horizontal and vertical spillovers are tested with the help of panel data fixed effects ‘within’ model. Spillovers across different industries of the services sector are also examined. It is inferred that horizontal spillovers positively affect total factor productivity of domestic firms in the services sector. Spillovers through backward vertical channels and forward vertical channels are, however, encountered to be negative. At an industry level, it is deduced that productivity spillovers vary across different industries with horizontal spillovers being more dominant than vertical spillovers.

Suggested Citation

  • Pooja Thakur & L.G. Burange, 2016. "An Analysis of Productivity Spillovers from Foreign Direct Investment in India’s Services Sector," Foreign Trade Review, , vol. 51(4), pages 271-286, November.
    • Handle: RePEc:sae:fortra:v:51:y:2016:i:4:p:271-286
    DOI: 10.1177/0015732516650805
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    References listed on IDEAS

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    More about this item

    Keywords

    Productivity spillovers; foreign direct investment; services sector; panel data models;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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