Does the Country of Origin of FDI Impact Wages in the Host Country? Evidence From Indian Manufacturing Firms

Arpit Gupta, Soumya Chicker, A.K.Srustidhar Chand and Jagadish Prasad Sahu

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: The paper aims to empirically demonstrate the country-of-origin effects of FDI on wages in the Indian manufacturing sector. We have employed firm-level panel data by mapping FDI and PROWESS data for the time period 2011-12 to 2020-21. Our results show that FDI has a significant positive impact on wages in the Indian manufacturing sector. Furthermore, we find that FDI from the USA has a significant positive impact on average wages. We also find that direct investment coming from tax haven countries (Mauritius, Cayman Islands, and Cyprus) has a positive impact on wages. Our results suggest that the average wage of the Indian manufacturing firms receiving FDI from the USA are significantly higher than the other firms. On the other hand, FDI from Asia and Europe does not have statistically significant impact on wages.

Keywords: Foreign Direct Investment; Country-of-Origin Effects; Manufacturing Sector Wage; Generalized Method of Moments (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:344190

DOI: 10.2139/ssrn.7630339

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