JAPANESE AND US FOREIGN DIRECT INVESTMENTS IN INDIAN MANUFACTURING

This book analyses the nature, pattern and impact of Japanese and US FDI on Indian manufacturing sector. It is found that Japanese and US FDI are attracted by different industrial characteristics. Further, firms from these two countries operating in the same industry in India, differ considerably in terms of their corporate financial structures and output and investment strategies. To estimate the differential impact of FDI from these two sources on productivity growth and export-intensity of firms and industries, sophisticated econometric models are used. Along with the direct impact, productivity and export spillovers from these two sources are also estimated. Contrary to theoretical expectations, US –affiliated firms are found to have higher export spillovers while Japanese affiliated firms are found to have higher productivity spillovers on domestic firms. This highlights the importance of source of FDI and home country characteristics in impact analysis of FDI on host country.