Journal Article

What Drives India's Outward FDI?

South Asian Journal of Macroeconomics and Public Finance

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.

Authors

Peter Nunnenkamp
Maximiliano Sosa Andrés
Krishna Chaitanya Vadlamannati
Andreas Waldkirch

Info

Publication Date
JEL Classification
F21