[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkwp/1800.html
   My bibliography  Save this paper

What drives India's outward FDI?

Author

Listed:
  • Nunnenkamp, Peter
  • Sosa Andrés, Maximiliano
  • Vadlamannati, Krishna Chaitanya
  • Waldkirch, Andreas
Abstract
We empirically assess the determinants of India's FDI outflows across a large sample of host countries in the 1996-2009 period. Based on gravity model specifications, we employ Poisson pseudo maximum likelihood (PPML) estimators. Major findings include: India's outward FDI is hardly affected by motives to access raw materials or superior technologies. Market-related factors appear to have dominated the location choices of Indian direct investors. A larger Indian diaspora in the host countries attracts more FDI. Finally, it seems that Indian direct investors are relatively resilient to weak institutions and economic instability in the host countries. However, we do not find robust evidence that India provides an alternative source of FDI for countries that traditional investors tend to avoid.

Suggested Citation

  • Nunnenkamp, Peter & Sosa Andrés, Maximiliano & Vadlamannati, Krishna Chaitanya & Waldkirch, Andreas, 2012. "What drives India's outward FDI?," Kiel Working Papers 1800, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1800
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/67336/1/731551370.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Crozet, Matthieu & Mayer, Thierry & Mucchielli, Jean-Louis, 2004. "How do firms agglomerate? A study of FDI in France," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 27-54, January.
    2. Desbordes, Rodolphe & Darby, Julia & Wooton, Ian, 2011. "Institutional Quality and FDI to the South An Analytical Approach," SIRE Discussion Papers 2011-70, Scottish Institute for Research in Economics (SIRE).
    3. Christian Milelli & Françoise Hay & Yunnan Shi, 2010. "Chinese and Indian firms in Europe: characteristics, impacts and policy implications," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 5(3/4), pages 377-397, July.
    4. Jaya Prakash Pradhan & Neelam Singh, 2011. "Business Group Affiliation And Location Of Indian Firms' Foreign Acquisitions," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 19-41.
    5. Thierry Warin & Phanindra V. Wunnava & Hubert P. Janicki, 2009. "Testing Mundell's Intuition of Endogenous OCA Theory," Review of International Economics, Wiley Blackwell, vol. 17(1), pages 74-86, February.
    6. UNCTAD Secretariat, 2006. "World Investment Report 2005—Transnational Corporations and the Internationalization of R&D," Foreign Trade Review, , vol. 40(4), pages 85-108, January.
    7. Gao, Ting, 2005. "Foreign direct investment from developing Asia: some distinctive features," Economics Letters, Elsevier, vol. 86(1), pages 29-35, January.
    8. Raphael Kaplinsky & Mike Morris, 2009. "Chinese FDI in Sub-Saharan Africa: Engaging with Large Dragons," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 21(4), pages 551-569, September.
    9. Jaya Prakash Pradhan & Neelam Singh, 2009. "Outward FDI and Knowledge Flows: A Study of the Indian Automotive Sector," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 1(1), pages 156-187, June.
    10. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 499-518, July.
    11. Christian Milelli & Françoise Hay, 2008. "Chinese and Indian firms’ entry into Europe: characteristics, impacts and policy implications," EconomiX Working Papers 2008-35, University of Paris Nanterre, EconomiX.
    12. Jaya Prakash Pradhan, 2011. "Emerging Multinationals: A Comparison of Chinese and Indian Outward Foreign Direct Investment," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(1), pages 113-148, April.
    13. Liu, Wan-Hsin & Nunnenkamp, Peter, 2011. "Domestic Repercussions of Different Types of FDI: Firm-Level Evidence for Taiwanese Manufacturing," World Development, Elsevier, vol. 39(5), pages 808-823, May.
    14. Megha Mukim & Peter Nunnenkamp, 2012. "The Location Choices of Foreign Investors: A District-level Analysis in India," The World Economy, Wiley Blackwell, vol. 35(7), pages 886-918, July.
    15. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    16. Crozet, Matthieu & Mayer, Thierry & Mucchielli, Jean-Louis, 2004. "How do firms agglomerate? A study of FDI in France," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 27-54, January.
    17. repec:bla:kyklos:v:54:y:2001:i:1:p:89-113 is not listed on IDEAS
    18. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    19. Karl P. Sauvant & Jaya Prakash Pradhan & Ayesha Chatterjee & Brian Harley (ed.), 2010. "The Rise of Indian Multinationals," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-11475-3, October.
    20. Mr. Montfort Mlachila & Ms. Misa Takebe, 2011. "FDI from BRICs to LICs: Emerging Growth Driver?," IMF Working Papers 2011/178, International Monetary Fund.
    21. Louis T. Wells, 1983. "Third World Multinationals: The Rise of Foreign Investments from Developing Countries," MIT Press Books, The MIT Press, edition 1, volume 1, number 026273169x, April.
    22. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o118937 is not listed on IDEAS
    23. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8o118937 is not listed on IDEAS
    24. Wooton, Ian & Darby, Julia & Desbordes, Rodolphe, 2009. "Does Public Governance Always Matter? How Experience of Poor Institutional Quality Influences FDI to the South," CEPR Discussion Papers 7533, C.E.P.R. Discussion Papers.
    25. Martijn Burger & Frank van Oort & Gert-Jan Linders, 2009. "On the Specification of the Gravity Model of Trade: Zeros, Excess Zeros and Zero-inflated Estimation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(2), pages 167-190.
    26. Michael A. Clemens & Steven Radelet & Rikhil R. Bhavnani & Samuel Bazzi, 2012. "Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth," Economic Journal, Royal Economic Society, vol. 122(561), pages 590-617, June.
    27. Sosa Andrés, Maximiliano & Nunnenkamp, Peter & Busse, Matthias, 2013. "What drives FDI from non-traditional sources? A comparative analysis of the determinants of bilateral FDI flows," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-53.
    28. Jaya Prakash Pradhan, 2004. "The determinants of outward foreign direct investment: a firm-level analysis of Indian manufacturing," Oxford Development Studies, Taylor & Francis Journals, vol. 32(4), pages 619-639.
    29. Gustavo J. Bobonis & Howard J. Shatz, 2007. "Agglomeration, Adjustment, and State Policies in the Location of Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 30-43, February.
    30. Deepak Nayyar, 2008. "The Internationalization of Firms From India: Investment, Mergers and Acquisitions," Oxford Development Studies, Taylor & Francis Journals, vol. 36(1), pages 111-131.
    31. Françoise Hay & Christian Milelli, 2011. "Chinese and Indian Firms in Europe: Main Characteristics and Presumed Impacts," Palgrave Macmillan Books, in: Louis Brennan (ed.), The Emergence of Southern Multinationals, chapter 9, pages 151-164, Palgrave Macmillan.
    32. Yasheng Huang & Heiwai Tang, 2012. "FDI Policies in China and India: Evidence from Firm Surveys," The World Economy, Wiley Blackwell, vol. 35(1), pages 91-105, January.
    33. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    34. Savita Bhat & K. Narayanan, 2011. "Technology Sourcing and Outward FDI: Comparison of Chemicals and Information Technology Industries in India," Transnational Corporations Review, Ottawa United Learning Academy, vol. 3(2), pages 50-64, June.
    35. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Farah Siddiqui & Danish Ahmed Siddiqui, 2019. "Causality between Tourism and Foreign Direct Investment: An Empirical Evidence from Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 7(1), pages 27-44, March.
    2. Mustafa Sakr & Andre Jordaan, 2017. "Foreign Market Selection of Emerging Multinational Corporations: Evidence from South African and Egyptian Corporations," Working Papers 201734, University of Pretoria, Department of Economics.
    3. Peter Nunnenkamp & Maximiliano Sosa Andrés, 2014. "Ownership Choices of Indian Direct Investors: Do FDI Determinants Differ between Joint Ventures and Wholly Owned Subsidiaries?," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 39-78, June.
    4. Alicia Garcia-Herrero & Sumedh Deorukhkar, 2014. "What explains India s surge in outward direct investment?," Working Papers 1416, BBVA Bank, Economic Research Department.
    5. Wladimir Andreff, 2014. "Outward foreign direct investment by Brazilian and Indian multinational companies: comparison with Russian-Chinese multinationals," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01279896, HAL.
    6. Wladimir Andreff, 2016. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01342391, HAL.
    7. Kottaridi, Constantina & Giakoulas, Dimitris & Manolopoulos, Dimitris, 2019. "Escapism FDI from developed economies: The role of regulatory context and corporate taxation," International Business Review, Elsevier, vol. 28(1), pages 36-47.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Nunnenkamp & Maximiliano Sosa Andrés & Krishna Chaitanya Vadlamannati & Andreas Waldkirch, 2012. "What Drives India’s Outward FDI?," South Asian Journal of Macroeconomics and Public Finance, , vol. 1(2), pages 245-279, December.
    2. Peter Nunnenkamp & Maximiliano Sosa Andrés, 2014. "Ownership Choices of Indian Direct Investors: Do FDI Determinants Differ between Joint Ventures and Wholly Owned Subsidiaries?," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 39-78, June.
    3. Sosa Andrés, Maximiliano & Nunnenkamp, Peter & Busse, Matthias, 2013. "What drives FDI from non-traditional sources? A comparative analysis of the determinants of bilateral FDI flows," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-53.
    4. Wladimir Andreff, 2015. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(2), pages 79-131, December.
    5. Wladimir Andreff, 2014. "Outward foreign direct investment by Brazilian and Indian multinational companies: comparison with Russian-Chinese multinationals," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01279896, HAL.
    6. Christian Milelli & Alice Nicole Sindzingre, 2013. "Chinese Outward Foreign Direct Investment in Developed and Developing Countries: Converging Characteristics?," Working Papers hal-04141177, HAL.
    7. Wladimir Andreff, 2016. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," Post-Print halshs-01342391, HAL.
    8. Wladimir Andreff, 2016. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01342391, HAL.
    9. Alessia Amighini & Chiara Franco, 2012. "Agglomeration Effects in South-South FDI," DEGIT Conference Papers c017_032, DEGIT, Dynamics, Economic Growth, and International Trade.
    10. Wladimir Andreff, 2014. "Outward foreign direct investment by Brazilian and Indian multinational companies: comparison with Russian-Chinese multinationals," Post-Print halshs-01279896, HAL.
    11. Geert Duysters & Myriam Cloodt & Wilfred Schoenmakers & Jojo Jacob, 2015. "Internationalisation Efforts of Chinese and Indian Companies: An Empirical Perspective," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 106(2), pages 169-186, April.
    12. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    13. Jaya Prakash Pradhan, 2010. "Strategic Asset-Seeking Activities of Emerging Multinationals: Perspectives of Foreign Acquisitions by Indian Pharmaceutical MNEs," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 1(2).
    14. Felipe J. Fonseca & Irving Llamosas-Rosas, 2019. "Spatial linkages and third-region effects: evidence from manufacturing FDI in Mexico," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(2), pages 265-284, April.
    15. Shima'a Hanafy, 2015. "Determinants of FDI Location in Egypt—Empirical Analysis Using Governorate Panel Data," MAGKS Papers on Economics 201513, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    16. Blanc-Brude, Frédéric & Cookson, Graham & Piesse, Jenifer & Strange, Roger, 2014. "The FDI location decision: Distance and the effects of spatial dependence," International Business Review, Elsevier, vol. 23(4), pages 797-810.
    17. Desbordes, Rodolphe & Wei, Shang-Jin, 2017. "The effects of financial development on foreign direct investment," Journal of Development Economics, Elsevier, vol. 127(C), pages 153-168.
    18. Tolentino, Paz Estrella, 2008. "The determinants of the outward foreign direct investment of China and India: Whither the home country?," MERIT Working Papers 2008-049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Bhargavi Jayanthi & S.N.V. Sivakumar & Arunima Haldar, 2016. "Cross-border Acquisitions and Host Country Determinants: Evidence from Indian Pharmaceutical Companies," Global Business Review, International Management Institute, vol. 17(3), pages 684-699, June.
    20. (ed.), 0. "Research Handbook on Economic Diplomacy," Books, Edward Elgar Publishing, number 16053.

    More about this item

    Keywords

    FDI outflows; gravity model; PPML; India;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkwp:1800. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.