Determinants of OFDI: A Study of Indian Manufacturing Firms

2017 ◽  
Vol 3 (2) ◽  
Author(s):  
Juhi Lohani ◽  
Timsi Bhatia
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Manufacturing Sector ◽  
Manufacturing Firms ◽  
Medium Size ◽  
Outward Foreign Direct Investment ◽  
Investment Environment ◽  
Exporting Firms

The main focus of this study is to analyze the determinants of Outward Foreign Direct Investment of firms in the Manufacturing sector of India. The data used for this study is from 2008-2010. The study shows that Indian enterprises in the manufacturing sector are investing in other countries for efficiency seeking benefits. The results indicate that mainly medium size enterprises invest abroad. They are RandD intensive and import intensive. Further, they are not the exporting firms. These results point to the fact that the Indian enterprises invest abroad to manufacture goods in a foreign location due to better investment environment abroad. They import the goods, produced in the plants abroad into India. Thus it appears that Indian OFDI is not to promote exports.

scholarly journals Globalization and Domestic Operations: Applying the JC/JD Method to Japanese Manufacturing Firms

2015 ◽  
Vol 14 (2) ◽  
pp. 1-35 ◽  
Author(s):  
Mitsuyo Ando ◽  
Fukunari Kimura
Keyword(s):  
Direct Investment ◽  
Multinational Enterprises ◽  
Firm Heterogeneity ◽  
Manufacturing Sector ◽  
Job Creation ◽  
Manufacturing Firms ◽  
Outward Foreign Direct Investment ◽  
Micro Data ◽  
Kolmogorov Smirnov ◽  
Smirnov Test

Does outward foreign direct investment accelerate de-industrialization at home or generate domestic jobs and operations? This paper applies the job creation (JC)/destruction (JD) method to micro data of Japanese manufacturing firms and provides a bird's eye view of the dynamism of globalizing firms in terms of domestic employment, domestic establishments, domestic affiliates, exports, and imports. It examines gross and net changes in domestic operations by multinational enterprises (MNEs) that expand operations abroad (expanding MNEs), compared with non-expanding MNEs and local firms, for the periods of 1998–2002, 2002–06, 2006–08, and 2008–10. It also conducts the Kolmogorov-Smirnov test to investigate whether the changes in domestic operations and trade by expanding MNEs are larger than those by other firm types. Major findings are the following: (1) gross changes in domestic employment and domestic operations are much larger than net changes, showing restructuring dynamism and firm heterogeneity; (2) de-industrialization or the shrinkage of the manufacturing sector is not relevant except for the period 1998–2002, though a slight declining trend in manufacturing activities is observed in recent years; (3) expanding multinational small- and medium-sized enterprises (SMEs) tends to enlarge domestic employment and domestic operations, compared with other types of SMEs; (4) expanding MNEs intensify headquarters activities; and (5) expanding multinational SMEs are likely to expand exports and imports more than other types of SMEs.

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