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


  • Nagesh Kumar



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

    1. 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. 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.
    2. Chowdhury, Mamta B, 2011. "India’s Outward Foreign Direct Investment: Closed Doors to Open Souk," MPRA Paper 32828, University Library of Munich, Germany.
    3. 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.
    4. 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.
    5. Kayam, Saime Suna, 2009. "Home market determinants of FDI outflows from developing and transition economies," MPRA Paper 16781, University Library of Munich, Germany.

    More about this item


    Investments; Indian enterprises; policy liberalization;

    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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