IDEAS home Printed from https://ideas.repec.org/p/ind/citdwp/13-02.html
   My bibliography  Save this paper

What Attracts FDI in Indian Manufacturing Industries?

Author

Listed:
  • Rashmi Rastogi

    () (Centre for International Trade and Development,Jawaharlal Nehru University)

  • Aparna Sawhney

    () (Centre for International Trade and Development,Jawaharlal Nehru University)

Abstract

In this paper we examine the pattern of inward FDI at the disaggregated industry level (NIC 3- digit), and test for the industry-specific characteristics that have been significant in attracting foreign investment in India during 2000-10. Since highly polluting industries (based on Central Pollution Control Board classification) have accounted for a substantive share of the FDI inflows, we control for these industries to discern the differential impact of industry characteristics in the dirty manufacturing sector. Our analysis of the FDI inflows focuses on a panel of top ten investing countries, as well as individual countries with relatively stringent environmental norms. Our results indicate that, on the whole (as well as from Japan), FDI inflows are significant in capital-intensive industries with high growth rate. In case of the US, the foremost industrialized country investing in India, the composition of FDI has shifted significantly towards less energy-intensive industries and labor-intensive non-polluting industries, while inflows within polluting industries have been towards the capital intensive industries with large market size.

Suggested Citation

  • Rashmi Rastogi & Aparna Sawhney, "undated". "What Attracts FDI in Indian Manufacturing Industries?," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 13-02, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
  • Handle: RePEc:ind:citdwp:13-02
    as

    Download full text from publisher

    File URL: https://www.jnu.ac.in/sites/default/files/DP02_2013.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert J. R. Elliott & Kenichi Shimamoto, 2008. "Are ASEAN Countries Havens for Japanese Pollutionā€Intensive Industry?," The World Economy, Wiley Blackwell, vol. 31(2), pages 236-254, February.
    2. Edward Manderson & Richard Kneller, 2012. "Environmental Regulations, Outward FDI and Heterogeneous Firms: Are Countries Used as Pollution Havens?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 317-352, March.
    3. V.N. Balasubramanyam, 2008. "Foreign Direct Investment," Chapters, in: Amitava Krishna Dutt & Jaime Ros (ed.),International Handbook of Development Economics, Volumes 1 & 2, volume 0, chapter 39, Edward Elgar Publishing.
    4. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
    5. Ulrich Wagner & Christopher Timmins, 2009. "Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 231-256, June.
    6. Vinish Kathuria, 2000. "Productivity spillovers from technology transfer to Indian manufacturing firms," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 343-369, April.
    7. Yuquing Xing & Charles Kolstad, 2002. "Do Lax Environmental Regulations Attract Foreign Investment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 1-22, January.
    8. Rana Hasan & Devashish Mitra & K.V. Ramaswamy, 2007. "Trade Reforms, Labor Regulations, and Labor-Demand Elasticities: Empirical Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 466-481, August.
    9. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
    10. K, S Chalapati Rao & Dhar, Biswajit, 2011. "India's FDI Inflows: Trends and Concepts," MPRA Paper 29153, University Library of Munich, Germany.
    11. Werner Baer & Rahul A. Sirohi, 2013. "The Role of Foreign Direct Investments in the Development of B razil and I ndia: A Comparative Analysis," Kyklos, Wiley Blackwell, vol. 66(1), pages 46-62, February.
    12. Andreas Waldkirch & Munisamy Gopinath, 2008. "Pollution Control and Foreign Direct Investment in Mexico: An Industry-Level Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(3), pages 289-313, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Maria Khan, 2018. "FDI Inflows and Environment in India," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(3), pages 138-145, September.
    2. Sethi, Pradeepta & Chakrabarti, Debkumar & Bhattacharjee, Sankalpa, 2020. "Globalization, financial development and economic growth: Perils on the environmental sustainability of an emerging economy," Journal of Policy Modeling, Elsevier, vol. 42(3), pages 520-535.

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ind:citdwp:13-02. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar). General contact details of provider: http://edirc.repec.org/data/itjnuin.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.