Is the evolution of India’s Outward FDI consistent with Dunning’s Investment Development Path sequence?

Swati Virmani () and Edmund Amann

No 92160912, Working Papers from Lancaster University Management School, Economics Department

Abstract: This paper examines whether India’s Outward Foreign Direct Investment (OFDI) pattern is consistent with Dunning’s Investment Development Path (IDP) sequence using macro data over the period 1980-2010. We test whether the level of development - proxied by GDP per capita - is the main factor explaining OFDI, and augment the IDP by studying other major determinants such as Exports, Inward FDI (IFDI), Human Capital, and R&D using the Cointegration and Error Correction Model techniques. Our results support the main proposition of the IDP, but also highlight the importance of other factors. We also find that OFDI Granger-causes R&D, suggesting a possibility of reverse technology spillover.

Keywords: Outward FDI; Investment Development Path; Error Correction Model; Granger Causality; Reverse Technology Spillovers (search for similar items in EconPapers)
JEL-codes: F21 F23 O30 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ino and nep-int
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:lan:wpaper:92160912

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