Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector

Subash Sasidharan

No 2006-010, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: During the recent period, we observe that many countries compete with each other to attract foreign investment. When MNCs invest in a host country, it is assumed that a part of their technology spills to the host country firms. But the empirical studies on spillover effects of FDI have failed to find robust empirical results about the possibility of positive spillover effects. This study is an attempt to empirically examine the spillover effects from the entry of foreign firms using firm level data of Indian manufacturing industries for the period 1994-2002. We consider both the horizontal and vertical spillover effects of FDI. Consistent with the findings of the previous studies, we find no evidence of significant horizontal spillover effects. In contrast, we find negative vertical spillover effects, although it is not statistically significant.

Keywords: Foreign Direct Investment; Horizontal Spillover; Vertical Spillover; Panel Data (search for similar items in EconPapers)
JEL-codes: C5 F2 O1 O3 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (12)

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Working Paper: Foreign Direct Investment and Technology Spillovers:Evidence from the Indian Manufacturing Sector (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2006010

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