TECHNOLOGY SPILLOVER AND DETERMINANTS OF FOREIGN DIRECT INVESTMENT: AN ANALYSIS OF INDIAN MANUFACTURING INDUSTRIES

Smruti Ranjan Behera ()
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Smruti Ranjan Behera: Indian Institute of Technology Ropar, India

Journal of Economic Development, 2015, vol. 40, issue 3, 55-83

Abstract: This paper examines the technology spillover from foreign direct investment (FDI) and subsequently, determines the factors for FDI-participation in Indian manufacturing industries. The result based on a two-equation model facilitating the link between labor productivity and foreign presence suggests that foreign presence plays an important role in the diffusion of technology from foreign firms to domestic firms, provided the recipient firms have the capacity to absorb and adopt the foreign technology. Furthermore, the results suggest that industries experiencing decline in the tariff cost exhibit stronger growth in labor productivity. Finally, we find that large domestic market size and highly productive domestic sectors, are likely to attract more FDI from abroad.

Keywords: Foreign Direct Investment; Technology Spillover; Manufacturing Industries (search for similar items in EconPapers)
JEL-codes: E23 F43 O41 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:40:y:2015:i:3:p:55-83

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