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Ownership Choices of Indian Direct Investors: Do FDI Determinants Differ between Joint Ventures and Wholly Owned Subsidiaries?

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  • Peter Nunnenkamp

    (Peter Nunnenkamp, Institut für Weltwirtschaft, Kiel Institute for the World Economy, Kiel, Germany. E-mail: peter.nunnenkamp@ifw-kiel.de)

  • Maximiliano Sosa Andrés

    (Maximiliano Sosa Andrés, Towers Watson, Montevideo, Uruguay. E-mail: maximiliano.sosa@towerswatson.com)

Abstract

Using count data on Indian joint ventures (JVs) and wholly owned subsidiaries (WOS), we present an empirical analysis of foreign direct investment (FDI)-related ownership choices and their relation with host country characteristics and indicators of transaction costs. Our Negative Binomial regression models offer only weak support for the bargaining perspective, according to which JVs should be more likely if the host countries were particularly attractive in terms of market access or resource endowments. Geographical and cultural distance has ambiguous effects on the choice between JVs and WOS. The composition of FDI projects tends to shift towards WOS where investment risks are contained by bilateral treaties and better control of corruption. JEL Classification : F21

Suggested Citation

  • Peter Nunnenkamp & Maximiliano Sosa Andrés, 2014. "Ownership Choices of Indian Direct Investors: Do FDI Determinants Differ between Joint Ventures and Wholly Owned Subsidiaries?," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 39-78, June.
    • Handle: RePEc:sae:smppub:v:3:y:2014:i:1:p:39-78
    DOI: 10.1177/2277978714525310
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    More about this item

    Keywords

    Outward FDI; ownership choices; transaction costs; host country characteristics; India;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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