What Drives India's Outward FDI?

36 Pages Posted: 25 Oct 2012

See all articles by Peter Nunnenkamp

Peter Nunnenkamp

University of Kiel

Maximiliano Sosa Andres

Towers Watson

Krishna Chaitanya Vadlamannati

University of Goettingen (Gottingen) - Department of Economics

Andreas Waldkirch

Colby College - Department of Economics

Date Written: October 25, 2012

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

JEL Classification: F21

Suggested Citation

Nunnenkamp, Peter and Sosa Andres, Maximiliano and Vadlamannati, Krishna Chaitanya and Waldkirch, Andreas, What Drives India's Outward FDI? (October 25, 2012). Towers Watson Technical Paper No. 2100530. Available at SSRN: https://ssrn.com/abstract=2166965 or http://dx.doi.org/10.2139/ssrn.2166965

Peter Nunnenkamp

University of Kiel ( email )

D-24100 Kiel
Germany

Maximiliano Sosa Andres (Contact Author)

Towers Watson ( email )

875 Third Avenue
New York, NY 10022
United States

HOME PAGE: http://www.towerswatson.com

Krishna Chaitanya Vadlamannati

University of Goettingen (Gottingen) - Department of Economics ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany

Andreas Waldkirch

Colby College - Department of Economics ( email )

Waterville, ME 04901
United States
207-859-5244 (Phone)
207-859-5229 (Fax)

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