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Does the Technology Gap Influence Spillovers? A Post-liberalization Analysis of Indian Manufacturing Industries


  • Vinish Kathuria


The purpose of this article is twofold: first to examine spillovers from existing foreign firms in India to local firms and whether the technology gap between foreign and domestic firms has any role to play in influencing spillovers; and second, to investigate whether the liberalization of the 1990s resulting in increased inflow of foreign direct investment (FDI) has had any influence in increasing the productivity of Indian firms. Using panel data for 1840 firms from 1995 to 2005, this study finds that in a large number of industries domestic firms are more productive than foreign firms, thereby precluding the possibility of spillovers to all the sectors. Even in the sectors where foreign firms are more productive and the technology gap is accounted for, there is no evidence of spillovers resulting from the presence of foreign firms. Similarly, FDI inflow seems to have no impact on productivity once industries are divided according to the size of the technology gap.

Suggested Citation

  • Vinish Kathuria, 2010. "Does the Technology Gap Influence Spillovers? A Post-liberalization Analysis of Indian Manufacturing Industries," Oxford Development Studies, Taylor & Francis Journals, vol. 38(2), pages 145-170.
  • Handle: RePEc:taf:oxdevs:v:38:y:2010:i:2:p:145-170
    DOI: 10.1080/13600811003793079

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    References listed on IDEAS

    1. Okada, Yosuke, 2005. "Competition and productivity in Japanese manufacturing industries," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 586-616, December.
    2. Yosuke Okada, 2005. "Competition and Productivity in Japanese Manufacturing Industries," NBER Working Papers 11540, National Bureau of Economic Research, Inc.
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    Cited by:

    1. C. Imbriani & R. Pittiglio & F. Reganati & E. Sica, 2014. "How Much do Technological Gap, Firm Size, and Regional Characteristics Matter for the Absorptive Capacity of Italian Enterprises?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 20(1), pages 57-72, February.
    2. repec:bla:jecsur:v:31:y:2017:i:2:p:546-571 is not listed on IDEAS
    3. repec:kap:iaecre:v:20:y:2014:i:1:p:57-72 is not listed on IDEAS

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