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FDI liberalization, firm heterogeneity and foreign ownership: German firm decisions in reforming India

Holger Görg (), Henning Mühlen and Peter Nunnenkamp

No 35, Proceedings of the German Development Economics Conference, Hannover 2010 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: The paper investigates the role of firm-level productivity and industry-level R&D for MNEs' choice of undertaking FDI, and the share of ownership in foreign affiliates. Two firm-specific datasets on German MNEs with varying equity stakes in Indian affiliates are used to account for the two-step decision process. The paper also analyses how German firm decisions were affected by the liberalisation of FDI regulations in India. Results show remarkable differences between the selection and the ownership share equation, and also between the pre-reform and post-reform periods. The evidence clearly reveals the tradeoffs involved in selective FDI approvals and foreign ownership restrictions.

Keywords: multinational enterprises; firm characteristics; selective FDI approval; German FDI; ownership share; Heckman model (search for similar items in EconPapers)
JEL-codes: F23 L25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn and nep-int
Date: 2010
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Citations: View citations in EconPapers (7) Track citations by RSS feed

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Journal Article: FDI Liberalisation, Firm Heterogeneity and Foreign Ownership: German Firm Decisions in Reforming India (2010) Downloads
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