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Emerging Multinationals: A Comparison of Chinese and Indian Outward Foreign Direct Investment

  • Jaya Prakash Pradhan


    (Sardar Patel Institute of Economic and Social Research, India)

The present study deals with the origin and growth of outward foreign direct investment (OFDI) by emerging Chinese and Indian multinationals and examines the locational determinants of such investments. Both Chinese and Indian OFDI flows were observed to have surged after the adoption of economic openness policies by the home country in the late 1970s and the 1990s respectively and are now increasingly being driven by wholly-owned projects and acquisitions abroad. Indian and Chinese firms both started OFDI operations in developing countries and then they expanded into developed regions in the 1990s. Among locational factors, both Chinese and Indian OFDI projects are attracted by host country imports from the sources, greater strength of host currencies, rising host prices and host status of being offshore financial centres. While the Chinese multinationals were found to have preference for hosts with locational proximity, small size and high natural resource endowments, the Indian firms appear to choose countries with large size and that have bilateral investment treaty (BIT) with India irrespective of their physical distance from India.

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Article provided by Faculty of Economics and Administration, University of Malaya in its journal International Journal of Institutions and Economies.

Volume (Year): 3 (2011)
Issue (Month): 1 (April)
Pages: 113-148

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Handle: RePEc:umk:journl:v:3:y:2011:i:1:p:113-148
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  1. V N Balasubramanyam & V Mahambare, 2003. "Foreign direct investment in India," Working Papers 539987, Lancaster University Management School, Economics Department.
  2. Yin-Wong Cheung & Xingwang Qian, 2009. "The Empirics of China's Outward Direct Investment," CESifo Working Paper Series 2621, CESifo Group Munich.
  3. Agnès Bénassy-Quéré & Maylis Coupet & Thierry Mayer, 2007. "Institutional Determinants of Foreign Direct Investment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00268751, HAL.
  4. Yin‐Wong Cheung & Jakob de Haan & Xingwang Qian & Shu Yu, 2012. "China's Outward Direct Investment in Africa," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 201-220, 05.
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