This paper examines whether India’s Outward Foreign Direct Investment (OFDI) pattern isconsistent with Dunning’s Investment Development Path (IDP) sequence using macro data overthe period 1980-2010. We test whether the level of development - proxied by GDP per capita - isthe main factor explaining OFDI, and augment the IDP by studying other major determinantssuch as Exports, Inward FDI (IFDI), Human Capital, and R&D using the Cointegration andError Correction Model techniques. Our results support the main proposition of the IDP, butalso highlight the importance of other factors. We also find that OFDI Granger-causes R&D,suggesting a possibility of reverse technology spillover.
|University of Central Lancashire
|Number of pages
|Published - 2015