Technology Spillover and Determinants of Foreign Direct Investment: An Analysis of Indian Manufacturing Industries

Smruti Ranjan Behera Smruti

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the spillover effect of foreign direct investment (FDI) and determinant of FDI across Indian manufacturing industries. The result, based on two-equation model that allows for the two-way link between labor productivity of locally owned industries and foreign presence provide evidence that foreign presence brings new channels of knowledge and technology spillover to domestic industrial firms. We find that intermediate factors like R&D intensity and technology import intensity can impact positively the productivity of domestic firms. Furthermore, we find that bigger market size and highly productive domestic sectors are likely to attract more foreign capital into Indian industries.

Keywords: Foreign Direct Investment; Technology Spillover; Manufacturing; Panel Cointegration; Unit Root Tests (search for similar items in EconPapers)
JEL-codes: C33 F30 L60 O32 (search for similar items in EconPapers)
Date: 2012-08-01
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ino, nep-int and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42178

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