Successful Foreign Direct Investment Through the Development of Parts Supply Industries in the Host Country: A Study of India's Automobile Manufacturing Sector

Manabu Furuta, Takahiro Sato and Keijiro Otsuka ()

The Developing Economies, 2024, vol. 62, issue 3, 195-237

Abstract: Several large multinationals and a few local assemblers dominate the Indian automobile industry. The largest multinational, Maruti Suzuki, entered the Indian automobile industry with a policy of developing local automotive parts manufacturers to achieve high local content ratio. This study seeks to determine the extent to which foreign direct investment (FDI) in host countries contributes to the growth of automobile parts manufacturers. We use district‐level panel data from 2000 to 2008 to assess the linkage between the production of major automobile assemblers and the development of automotive parts suppliers located in the same and adjacent districts to those assemblers. Our regression results show the heterogeneity of the linkages, suggesting that the formation of industrial clusters by local parts suppliers and the expansion of their production capacity are likely to be key determinants of the success of FDI in the Indian automobile industry, rather than relying on in‐house parts production or imports.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/deve.12401

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:deveco:v:62:y:2024:i:3:p:195-237

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0012-1533

Access Statistics for this article

The Developing Economies is currently edited by Katsuji Nakagane

More articles in The Developing Economies from Institute of Developing Economies Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().