Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector

Sasidharan, Subash (2006). Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector. UNU-MERIT.

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  • Author Sasidharan, Subash
    Title Foreign Direct Investment and Technology Spillovers: Evidence from The Indian Manufacturing Sector
    Publication Date 2006
    Publisher UNU-MERIT
    Abstract During the recent period, we observe that many countries compete with each other to attract foreign investment. When MNCs invest in a host country, it is assumed that a part of their technology spills to the host country firms. But the empirical studies on spillover effects of FDI have failed to find robust empirical results about the possibility of positive spillover effects. This study is an attempt to empirically examine the spillover effects from the entry of foreign firms using firm level data of Indian manufacturing industries for the period 1994-2002. We consider both the horizontal and vertical spillover effects of FDI. Consistent with the findings of the previous studies, we find no evidence of significant horizontal spillover effects. In contrast, we find negative vertical spillover effects, although it is not statistically significant.
    Keyword Foreign direct investment
    Horizontal spillover
    Vertical spillover
    Panel data
    JEL F2
    O1
    O3
    Copyright Holder UNU-MERIT
    Copyright Year 2006
    ISSN 1871-9872
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