Impact of Outward FDI on Firms Productivity in the Steel Industry: Evidence from India

Authors

  • Sukanya R NMKRV College for Women, Bangalore.

Keywords:

Productivity, Steel industry, Indian manufacturing firms, Outward Foreign Direct Investment (FDI)

Abstract

This paper examines the impact of Outward FDI (OFDI) on productivity and analyses its substantial effect on home countries' steel firms. For the analysis, the study classifies the steel companies into a treatment group and a control group based on the attributes of the company to evaluate the effects of OFDI on total factor productivity (TFP). To analyze India's FDI investment objective and its impact on productivity, the study ranks economies into low- and middle-income, high- and middle-income, and tax havens to analyze productivity growth. The data for the analysis come from Prowess, a World Bank database. The data of outward FDI from Indian companies is compiled from the UNCTAD database. Outward Foreign direct investment improves the productivity of steel companies in home countries in the long term. Outward FDI's firm effect encounters a different outcome, based on sub-sectors, regions, and ownership of firms. Outward FDI's firm effect is reinforced by FDI, R&D, and exporting of steel firms. India's overseas (outward FDI) investment in tax haven destinations is considerably high compared to upper and low- and middle-income economies impacting the home countries' firm's productivity. The novelty of the study suggests that research on  FDI does not focus on the impact on the issuing party, particularly FDI  from low- and middle-income countries. The effects of  Outward FDI on the substantial implications at the micro-level are limited in the literature. It also noted that existing studies have not analyzed the impact of outward FDI on the firms Outward FDI's firm effect, particularly outward FDI from low- and middle-income economies. Therefore, the study analyzes the effects of  FDI with special reference to the Indian steel industry. The conclusions are based on empirical results.

Author Biography

Sukanya R, NMKRV College for Women, Bangalore.

Assistant Professor, Department of Commerce, NMKRV College for Women, Bangalore, Karnataka, India.

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Published

2022-05-11

How to Cite

R, S. (2022). Impact of Outward FDI on Firms Productivity in the Steel Industry: Evidence from India. Ushus Journal of Business Management, 21(1). Retrieved from https://journals.christuniversity.in/index.php/ushus/article/view/3346