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Emerging Multinationals : Trends, Patterns and Determinants of Outward Investment by Indian Enterprises

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  • Nagesh Kumar

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Abstract

This paper has analyzed the trends, patterns and determinants of outward Investments by Indian enterprises that have increased notably since the onset of reforms. It finds that the sharp rise in outward investments since 1991 has been accompanied by a shift in geographical and sectoral focus of Indian investments. It develops an analytical framework for explaining the probability of an Indian enterprise investing abroad in an exclusive large dataset of Indian enterprises. The findings suggest that Indian enterprises draw their ownership advantages from their accumulated production experience, cost effectiveness of their production processes and other adaptations to imported technologies made with their technological effort, and some times with their ability to differentiate product. Firm size exerts a positive but a non-linear effect. Enterprises that are already in export markets are more likely to be outward investors. Finally, policy liberalization of 1990s turns out to have pushed Indian enterprises abroad.

Suggested Citation

  • Nagesh Kumar, 2006. "Emerging Multinationals : Trends, Patterns and Determinants of Outward Investment by Indian Enterprises," Microeconomics Working Papers 22108, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:microe:22108
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    References listed on IDEAS

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    1. Li-Gang Liu & Edward M. Graham, 1998. "The Relationship Between Trade and Foreign Investment: Empirical Results for Taiwan and South Korea," Working Paper Series WP98-7, Peterson Institute for International Economics.
    2. N/A, 2004. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 190(1), pages 8-32, October.
    3. Louis T. Wells, 1983. "Third World Multinationals: The Rise of Foreign Investments from Developing Countries," MIT Press Books, The MIT Press, edition 1, volume 1, number 026273169x, December.
    4. Irving B. Kravis & Robert E. Lipsey, 1971. "Empirical Results," NBER Chapters, in: Price Competitiveness in World Trade, pages 19-35, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Rishika Nayyar & Jaydeep Mukherjee, 2018. "Outward FDI from India: A macro level examination in the presence of structural breaks," Working Papers 1833, Indian Institute of Foreign Trade.
    2. Andreff Wladimir & Balcet Giovanni, 2011. "Emerging multinational companies investing in developed countries: at odds with the HOS theorem?," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201107, University of Turin.
    3. Chowdhury, Mamta B, 2011. "India’s Outward Foreign Direct Investment: Closed Doors to Open Souk," MPRA Paper 32828, University Library of Munich, Germany.
    4. Kayam, Saime S. & Hisarcıklılar, Mehtap & Kayalıca, Özgür, 2011. "Spoilt for Choice: Explaining the location choice of Turkish Transnationals," MPRA Paper 39150, University Library of Munich, Germany.
    5. Pranav N. Desai, 2013. "Export Innovation System: Changing Structure of India’s Technology-Intensive Exports," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 5(3), pages 21-52, October.
    6. Nagesh Kumar & Kevin P. Gallagher, 2007. "Relevance of ‘Policy Space’ for Development : Implications for Multilateral Trade Negotiations," Trade Working Papers 22111, East Asian Bureau of Economic Research.
    7. Tiwari, Rajnish & Herstatt, Cornelius, 2009. "The emergence of Indian multinationals: An empirical study of motives, status-quo and trends of Indian investments in Germany," Working Papers 56, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
    8. Anwar, Amar Iqbal & Hasse, Rolf & Rabbi, Fazli, 2008. "Location Determinants of Indian Outward Foreign Direct Investment: How Multinationals Choose their Investment Destinations?," MPRA Paper 47397, University Library of Munich, Germany.
    9. Fiorenza Belussi & Giulia Rudello & Maria Savarese, 2016. "The Internationalization Of Mnes From And To Brics Countries: The Case Of The Industrial Machinery Industry," "Marco Fanno" Working Papers 0205, Dipartimento di Scienze Economiche "Marco Fanno".
    10. Kayam, Saime Suna, 2009. "Home market determinants of FDI outflows from developing and transition economies," MPRA Paper 16781, University Library of Munich, Germany.

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D20 - Microeconomics - - Production and Organizations - - - General
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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