Do productivity spillovers from Japanese and U.S. FDI differ?

Abstract

FDI comes from different sources, with different levels of technology, different modes of transferring it and into different industries. The spillover effects of FDI may therefore differ. The paper attempts to study empirically the spillover effects of Japanese and U.S. FDI on the total factor productivity growth of the Indian firms, both at the firm and the industry level. The results show that the presence of Japanese equity in the industry has a positive spillover effect while the market share of Japanese firms is negatively associated with the productivity growth of the Indian firms. However, the net spillover effect at the industry level is positive. The spillover effects from U.S. FDI are however not significant.