423 research outputs found

    Identification of the influential factors of foreign direct investment in the Indian manufacturing sector

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    There are many factors that may influence Foreign Direct Investment (FDI) in a certain country. The study identifies the influential factors of foreign direct investments with an emphasis on foreign multinational companies in the manufacturing sector of India. It is believed that the growing need for FDI in the global economy is what derives the interest of both foreign investors and host countries in engaging in FDI. In the globalized world economy of the twenty-first century, the world market for foreign investments has become more competitive. FDI is welcomed by countries, especially developing ones. FDI can be an effective contributor not only to economic growth, but it is also important to management skills, technology transfers and a higher standard of living. Therefore, developing countries have made considerable efforts over the past decade to improve their investment climate by offering a wide range of investment incentives. The research highlights incentives attracting foreign investments and discusses the benefits gained from it. The first stage of the thesis is to outline the objectives of the study, with a review of literature relevant to the subject. The second stage is to collect data needed for the research. Finally, the results and discussion are presented together with some recommendations for further research. It is hoped that the outcomes of this research will provide some guidelines that will enable India to become a better place for conducting businesses and a favourable destination for foreign investments

    Impact of Outward FDI on Firms’ Productivity in the Steel Industry: Evidence from India

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    This paper examines the impact of Outward FDI (OFDI) on productivity and analyses its substantial effect on home countries' steel firms. For the analysis, the study classifies the steel companies into a treatment group and a control group. To analyse India's FDI investment objective and its impact on productivity, the study ranks economies into low- and middle-income, high- and middle-income, and tax havens to analyse productivity growth. The data for the analysis come from Prowess, a World Bank database. The data of outward FDI from Indian companies is compiled from the UNCTAD database. The study suggests that research on FDI does not focus on the impact on the issuing party, particularly FDI from low- and middle-income countries. The study analyses the effects of FDI with special reference to the Indian steel industry

    New insights on the role of location advantages in international innovation

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    This paper takes a closer look at the role of location advantages in the spatial distribution of MNE R&D activity. In doing so, we have returned to first principles by revisiting our understanding of L and O advantages and their interaction. We revisit the meaning of L advantages, and offer a succinct differentiation of L advantages. We emphasise the importance of institutions, and flesh out the concept of collocation L advantages, which play an important role at the industry and firm levels of analysis. Just because a country possesses certain L advantages when viewed at a macro-level, does not imply that these are available to all industries or all firms in that location without differential cost. When these are linked to the distinction between location-bound and non location-bound O advantages, and we distinguish between MNEs and subsidiaries it allows for a clearer understanding of the MNE's spatially distributed activities. These are discussed here in the context of R&D, which - in addition to the usual uncertainties faced by firms - must deal with the uncertainties associated with innovation. Although prior literature has sometimes framed the centralisation/decentralisation, spatial separation/collocation debates as a paradox facing firms, when viewed within the context of the cognitive limits to resources, the complexities of institutions, and the slow pace of the evolving specialisation of locations, these are in actuality trade-offs firms must make.FDI, foreign investment, direct investment, multinationals, transnational corporations, MNEs, eclectic paradigm, collocation, locational advantage, country specific advantages

    India: A New Player in Asian Production Networks?, Studies in Trade and Investment 75

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    While the IPN phenomenon has accelerated trade and investment linkages between countries in East and South-East Asia, the remainder of the region has not matched those countries in this process. The objective of this study is to explore the reasons for this by using India’s performance in the Asian IPNs as a case study for other countries that are trailing behind in this area. The study seeks to identify the reasons why India has performed below its potential in this new form of international division of labour, even though that country possess several supportive factors including: (a) the sheer size of the economy and population; (b) a large pool of engineers; (c) relatively sound intellectual property protection; and (d) an increasingly open trade and investment climate resulting from progressive economic reforms.production network, fragmentation of production, Asia, value chain, India manufacturing sector, China, India, Offshoring, MNCs, FDI

    Foreign Direct Investment: Effects, Complementarities, and Promotion

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    In 1996, Intel Corporation announced the construction of a semiconductor assembly plant in Costa Rica. Production started in 1998. Intel’s investment was six times what had been the annual foreign direct investment (FDI) in this Central American country of 3.5 million people (see Spar, 1998) and it marked the expansion of FDI in electronics, medical devices, and business services by companies such as Boston Scientific, Hewlett Packard, IBM, and Procter & Gamble. But Intel’s investment in Costa Rica was also emblematic of the desire of Central American countries to move away from textile and clothing manufacturing into higher-end manufacturing and services, in hopes of boosting development efforts by promoting technology upgrades, knowledge spillovers, and linkages of foreign with domestic firms. In 2014, the company announced the restructuring of the facilities. Intel’s Global Services Center as well as the company’s Engineering and Design Center will remain in their current location in Costa Rica. These operations will gain relevance in Research & Development related activities. As part of its global strategy, the company will relocate its assembly and test operation to Asia, where these activities will be concentrated. Headcount for R&D services operations currently reaches 1200 people and new positions were recently been announced

    On Geography and Institutions as Determinants of Foreign Direct Investment. A cross country comparative analysis of sub-Saharan African relative to developing countries

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    This work explores what factors determine foreign direct investment (FDI) in sub-Sahara Africa (SSA) relative to non-sub-Saharan African countries, using a panel data set which encompasses most of the world´s developing countries between 1997 and 2006. The results indicate that institutions and infrastructure development promoted FDI to non-SSA but did not induce FDI to sub-Saharan Africa. Geography played a modest and indirect role. The marginal benefit from openness to trade was higher for SSA, which is closely related to resource-seeking FDI that did not translate into sustained economic growth, neither institutional change, but consequently crowded out the second FDI wave of manufacturing. At the same time, FDI into value-added manufacturing largely located in non-SSA countries acted as engine for scaling the economic development ladder through institutional improvement for a number of non-SSA countries. Hence, FDI has the potential to act as a reliable and equitable driver of sustained economic development and poverty alleviation. The destiny of the “resource curse” linked to FDI failure marks the novelty of this paper in the FDI and development literature.Foreign direct investment, developing countries, sub-Saharan Africa, resource curse, geography, institutions

    How has the Indian Corporate Sector Responded to Two Decades of Economic Reforms in India? An Exploration of Patterns and Trends

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    In the context of various policy initiatives made during the last two decades to reform the Indian economy in general and corporate sector in particular, the present paper attempts to assess how the firms have responded to these policy measures and the resultant changes in the business conditions in a long run perspective. The paper finds that although the rate of growth of the Indian industry sector has not accelerated following economic reforms probably due to slow growth in agriculture and industrial productivity, investment in general and FDI in particular have shown considerable increase. Increase in competitive pressures during this period has forced the firms to adopt a variety of strategies. While reliance on mergers and acquisitions (M&A) has increased to restructure business and grow, the role of embodied and disembodied technology purchase has declined with firms relying somewhat more on in-house R&D. On the other hand, although strategies of building marketing and distribution related complementary assets continue to dominate the strategy of product differentiation, their role in a relative sense seems to have declined as these expenses as a proportion of sales show a declining trend. However, the emerging competitive pressures have raised the importance of sub-contracting/ outsourcing manufacturing, reducing the degrees of vertical integration. Interestingly, while cost-efficiencies do not show improvements, export orientation has increased across the industries significantly signaling enhanced global competitiveness of Indian firms, although imports have risen faster than exports. Overall, the observed trends of corporate response to economic reforms are interesting, but one need to systematically explore how M&A led consolidation and flows of FDI are linked to the adoption of various non-price strategies relating to technology and product differentiation. As economic reform deepens and competitive pressures build up, an analysis of these interactions would provide useful insights for understanding corporate behaviour and for making policy choices.

    Trade, Foreign Investment, and Industrial Policy

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    During the last three decades, developing countries have made enormous strides in opening up their protected domestic markets to international trade and foreign investment. Yet most countries have not simply opened up their markets. They have also instituted a range of policies to encourage exports, attract foreign direct investment(FDI), promote innovation, and favor some industries over others. This leads to the following question: is openness to trade and FDI alone sufficient to achieve high growth rates in developing countries? If harnessing the gains from globalization requires additional policies, can we identify them? While some types of complementary policies, such as building roads and ports, are not controversial, others are. Bhagwati's suggestion to "attract foreign funds" implies tilting incentives in favor of foreign investors, which means abandoning policy neutrality. Our goal in this chapter is to explore the popular but controversial idea that developing countries benefit from abandoning policy neutrality vis-a-vis trade, FDI and resource allocation across industries.Trade, Foreign Investment, Industrial Policy, Developing Countries
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