Export-orientation of Foreign Manufacturing Affiliates in India: Factors, Tendencies and Implications
This paper addresses an important development issue in literature of international production, namely what motivates market‐seeking foreign direct investment (FDI) to undertake export activities. It is well recognized in the concerned literature that export‐oriented FDI is more beneficial for the host country than purely domestic market‐seeking FDI. Hence, many developing countries like India have policy concerns on foreign firms playing a very minimal role in their export activities. Various studies including that of UNCTAD (2003) noted that foreign direct investment (FDI) in Indian manufacturing has been and remains largely domestic market‐seeking. In view of this low export contribution by foreign firms, existing studies suggest that developing countries like India should improve their locational advantages to attract export‐oriented FDI as opposed to local market‐oriented FDI like quality of available infrastructure, availability of cheap but skilled manpower, expanding the size of export processing zones, participation in bilateral/multilateral trade and investment regimes, etc. However, these studies have not examined those factors that could motivate the existing market‐seeking FDI into export activities. The contribution of the present study is precisely to address this issue and identify factors encouraging market‐seeking FDI to take up export activities. The empirical analysis has been conducted in two stages. In the first stage, we have estimated the export shares and export‐orientation of foreign firms in Indian manufacturing across 17 Indian industries over 1991–2005. In the second stage, we have analyzed the impact of five set of factors—size and growth of host country market, local competition, policy regime, import competition and industry‐characteristics on the export‐orientation of foreign firms in Indian manufacturing. The empirical findings from the panel data analysis of 17 Indian industries over 1991–2005 has thrown up several policy implications important for increasing export‐orientation of foreign firms in a developing country like India.
|Date of creation:||Aug 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eric Ramstetter, 1999. "Trade Propensities and Foreign Ownership Shares in Indonesian Manufacturing," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(2), pages 43-66.
- Manoj Pant, 1993. "Export performance, Transnational Corporations and the Manufacturing Sector: A Case Study of India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 28(1), pages 41-54, January.
- Krishna, Pravin & Mitra, Devashish, 1998.
"Trade liberalization, market discipline and productivity growth: new evidence from India,"
Journal of Development Economics,
Elsevier, vol. 56(2), pages 447-462, August.
- Pravin Krishna & Devashish Mitra, . "Trade Liberalization, Market Discipline and Productivity Growth: New Evidence From India," Working Papers 96-8, Brown University, Department of Economics.
- Aradhna Aggarwal, 2007.
"Liberalisation, Multinational Enterprises and Export Performance: Evidence from Indian Manufacturing,"
- A. Aggarwal, 2002. "Liberalisation, Multinational Enterprises and Export Performance: Evidence from Indian Manufacturing," Journal of Development Studies, Taylor & Francis Journals, vol. 38(3), pages 119-137.
- Magnus Blomström & Ari Kokko & Mario Zejan, 1994. "Host country competition, labor skills, and technology transfer by multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(3), pages 521-533, September.
- Xiaohui Liu & Chang Shu, 2003. "Determinants of Export Performance: Evidence from Chinese Industries," Economic Change and Restructuring, Springer, vol. 36(1), pages 45-67, March.
- Stefan Lutz & Oleksandr Talavera, 2004.
"Do Ukrainian Firms Benefit from FDI?,"
Economic Change and Restructuring,
Springer, vol. 37(2), pages 77-98, 06.
- Lutz, Stefan H. & Talavera, Oleksandr, 2003. "Do Ukrainian firms benefit from FDI," ZEI Working Papers B 04-2003, University of Bonn, ZEI - Center for European Integration Studies.
- Talavera, Oleksandr & Lutz, Stefan H., 2003. "Do Ukrainian Firms Benefit from FDI?," ZEW Discussion Papers 03-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Camilla Jensen, 2002. "Foreign direct investment, industrial restructuring and the upgrading of Polish exports," Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 207-217.
- Nagesh Kumar, 1998. "Multinational enterprises, regional economic integration, and export-platform production in the host countries: An empirical analysis for the US and Japanese corporations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(3), pages 450-483, September.
- Currie, Janet & Harrison, Ann E, 1997. "Sharing the Costs: The Impact of Trade Reform on Capital and Labor in Morocco," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S44-71, July.
- Magnus Blomstrom & Ari Kokko & Mario Zejan, 1992. "Host Country Competition and Technology Transfer by Multinationals," NBER Working Papers 4131, National Bureau of Economic Research, Inc.
- Xiaohui Liu & Peter Burridge & P. J. N. Sinclair, 2002. "Relationships between economic growth, foreign direct investment and trade: evidence from China," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1433-1440.
- Haishun Sun, 2001. "Foreign Direct Investment and Regional Export Performance in China," Journal of Regional Science, Wiley Blackwell, vol. 41(2), pages 317-336.
- MacDonald, James M, 1994. "Does Import Competition Force Efficient Production?," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 721-27, November.
- Nagesh Kumar, 1994. "Determinants of Export Orientation of Foreign Production by U.S. Multinationals: An Inter-Country Analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(1), pages 141-156, March.
- Douglas P Woodward & Robert J Rolfe, 1993. "The Location of Export-Oriented Foreign Direct Investment in the Caribbean Basin," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(1), pages 121-144, March.
- Kamal Saggi, 2002.
"Trade, Foreign Direct Investment, and International Technology Transfer: A Survey,"
World Bank Research Observer,
World Bank Group, vol. 17(2), pages 191-235, September.
- Saggi, Kamal, 2000. "Trade, foreign direct investment, and international technology transfer : a survey," Policy Research Working Paper Series 2349, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:12338. 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: (Joachim Winter)
If references are entirely missing, you can add them using this form.