Productivity Spillovers in Indian Manufacturing Firms (original) (raw)

Does Higher Productivity and Efficiency Leads to Spillover: Evidence from Indian Manufacturing’

Journal of Developing Areas, Vol.48, no.3, 2014

This paper empirically analyzes spillover effects from foreign direct investment using the firm level panel data of Indian manufacturing during 2000-01 and 2009-10. It first estimates the productivity and efficiency of the domestic and foreign firms separately before examining the spillover effects by using PROWESS dataset. The use of the Cobb-Douglas production function for productivity and stochastic frontier approach for efficiency reveals higher productivity and efficiency of the foreign firms over their domestic counterparts. Similarly, the findings show a significant impact of FDI on output growth. This indicates that any increase in foreign equity at the firm and sector level directly affects productivity. We attempt to find the possible reason for positive spillover effects by analyzing the detail of the present trends and the dataset. JEL Classifications: F2, D24, L1, N65

The Direct and Indirect Impact of Foreign Direct Investment on Productivity Growth in Indian Manufacturing

Studies have found the impact of foreign direct investments (FDI) on productivity growth to be firm-industry-host economy specific. However, the impact of FDI may differ with the existing market conditions in the economy and also with respect to the source of the FDI. The paper examines the impact of FDI on productivity growth of the Indian industry in the period of low market demand conditions, i.e., 1995-96 to 1999-2000. It also compares empirically the spillover effects of Japanese and U.S. FDI on the total factor productivity growth both at the industry and at the firm level. Panel data estimation techniques are employed.

The impact of imported and domestic technologies on the productivity of firms: panel data evidence from Indian manufacturing firms

Journal of Development Economics, 2002

This paper estimates production functions using panel data on Indian manufacturing firms. The results indicate a statistically significant impact of imported technologies on productivity, especially on account of imports of disembodied technology. New domestic capital goods also impact productivity positively and, in fact, tend to do so in a wider range of industries. However, the productivity enhancing effects of domestic capital goods appear to owe more to the disembodied technologies imported by producers of domestic capital goods than the R&D they conduct.

R&D, Technology Imports and Total Factor Productivity in Indian Manufacturing: Revisited

2015

The paper investigates into the impact of imported foreign technology and Total Factor Productivity on firm-level R&D intensity in Indian manufacturing during post-reforms. While determining the factors underlying R&D intensity, a firm specific model has been set up for econometric estimation. The role of foreign ownership is also studied. Hausman-Taylor estimation results show that Indian R&D is innovative for low technology industries but adaptive for high technology industries. This is also suggestive of the fact that the high technology industries do not get positively influenced by Total Factor Productivity. Older firms and small sized firms are found to invest in domestic R&D. Foreign ownership however, does not play any significant role in explaining R&D intensity of firms across sectors in Indian manufacturing.

Productivity Growth of Indian Manufacturing Firms in an Era of Economic Reforms : A Review

This article provides an overview of recent studies on productivity growth of Indian manufacturing firms in the post-1991 period. The central question is whether there has been a significant acceleration in productivity growth rates of manufacturing firms in India in an era of economic liberalization. This article has observed that impact of economic reforms is not uniform across all sectors. Studies have shown that factors like import of disembodied technology, availability of wider varieties of imported inputs, foreign investment, change in market structure and R&D intensity are significant determinants for productivity growth in the post-reform period.

FDI Spillovers and Local Productivity Growth: Evidence From Indian Pharmaceutical Industry

2004

The study tests the FDI spillover hypothesis in the Indian Pharmaceutical industry using an unbalanced panel data for a sample of firms over the period 1989-90 to 2000-01. The study estimates firm-specific productive efficiency growth for domestic firms from frontier production function and relates the same to a set of firm-specific attributes along with the variables of foreign presence. The study found that the presence of foreign firms per se may not be important for productivity growth of domestic firms unless it is complemented by the latter's R&D activity or size. Therefore, the study concludes that policy efforts to encourage R&D and some concentration of size of the domestic firms in the industry may be more desirable than passively liberalizing the FDI policy from the point of view of increasing productive efficiency of local enterprises.

Foreign Investment and Productivity: A Study of Post-reform Indian Industry

2005

The paper uses firm level panel data for Indian industries in the post-reform period to study the direct and indirect productivity effects generated by foreign investment. It finds no evidence that foreign investment directly increased firm-level productivity, nor that R&D spending was more productive in firms or sectors with higher foreign investment. It however finds strong evidence that local firms benefited from foreign investment in their industries. These benefits are higher for larger firms and those that do more business domestically.