Technology intensity and outward foreign direct investment from the Indian manufacturing sector: A firm-level analysis

摘要

Outward foreign investment from developing countries is not a new phenomenon. But its magnitude has increased in recent years. It was found that around 19% of FDI emanated from developing countries during the period 2011-2013. The share of outward foreign direct investment (OFDI) from India also increased from 0.01% during 1980-1982 to 0.48% during 2011-2013. As a percentage of GDP, OFDI from India was 0.37%, which increased to 5.68% in 2010 and to 6.23% in 2013. Thus, the aim of this article is to present the overall pattern and trend of OFDI from India. Second, the article tried to examine the factors that determine OFDI from different technology-intensive - high-technology (HT) and low-technology (LT) - industries from a developing country, India. To this end, two manufacturing industries pharmaceuticals from among HT industries and metals and metal products from the LT subgroup - were chosen. Using firm-level data, the logit model was used to examine the effect of variables like imports, exports, sales, technology, etc. on OFDI. It was found that sales, followed by exports, investment in R&D and outsourced jobs in decreasing order of magnitude, has a prominent impact in determining the choice of OFDI for firms from pharmaceuticals industries, whereas sales and exports has a significant impact in determining the probability of OFDI from firms belonging to the metals and metal products industries. Thus, it could be inferred that the liberal policies since the 1990s, and more so after 2000, towards foreign investment by Indian firms have made more and more Indian firms multinational.