Kiel Working Papers, Kiel Institute for World Economics
No 1800:
What Drives India’s Outward FDI?
Peter Nunnenkamp, Maximiliano Sosa Andrés, Krishna Chaitanya Vadlamannati and Andreas Waldkirch
Abstract: We empirically assess the determinants of India’s FDI
outflows across a large sample of host countries in the 1996-2009 period.
Based on gravity model specifications, we employ Poisson pseudo maximum
likelihood (PPML) estimators. Major findings include: India’s outward FDI
is hardly affected by motives to access raw materials or superior
technologies. Market-related factors appear to have dominated the location
choices of Indian direct investors. A larger Indian diaspora in the host
countries attracts more FDI. Finally, it seems that Indian direct investors
are relatively resilient to weak institutions and economic instability in
the host countries. However, we do not find robust evidence that India
provides an alternative source of FDI for countries that traditional
investors tend to avoid
Keywords: FDI outflows, gravity model, PPML, India; (follow links to similar papers)
JEL-Codes: F21; (follow links to similar papers)
34 pages, October 2012
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