Does FDI Induce Knowledge Spillovers? Evidence from Indian Pharmaceutical Industry

Ramesh Jangili (), N. R. V. V. M. K. Rajendra Kumar () and N. Srinivasa Rao ()
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N. R. V. V. M. K. Rajendra Kumar: Reserve Bank of India
N. Srinivasa Rao: Ministry of Rural Development, Government of India

A chapter in Studies in International Economics and Finance, 2022, pp 235-251 from Springer

Abstract: Abstract The study examines knowledge spillovers from multinational firms in the pharmaceutical industry in India. Specifically, we examine if FDI catalyses diffusion of knowledge transfer from multinational firms’ R&D activities during 2000–01 to 2019–20 and four sub-periods of five years each. The empirical evidence suggests that multinational firms do not have an impact on the output of domestic firms in the first two sub-periods. However, generate positive knowledge spillovers in the last two sub-periods, increasing the output of domestic firms. FDI flows in the pharmaceutical sector increased mainly in the last two sub-periods due to policy changes and more relaxed FDI norms. The study finds that the competition effect exists and distinguishes domestic firms. Firms not investing in R&D face enhanced competition from firms investing in R&D activities.

Keywords: Knowledge spillover; FDI; R&D intensity; India; Pharmaceutical sector; D24; F23; F65; O32 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-16-7062-6_13

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DOI: 10.1007/978-981-16-7062-6_13

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