Nilanjan Banik and Khanindra Ch. Das
The notion that China is factory of the world is now changing. Factories in China are shifting their production base to neighboring Asia, primarily because of higher input costs…
Abstract
The notion that China is factory of the world is now changing. Factories in China are shifting their production base to neighboring Asia, primarily because of higher input costs in China, a volatile Chinese exchange rate, and protectionist measures targeted against Chinese exports. In this paper, we examine the location substitution effect for China: Chinese firms are exporting primary, intermediate and machinery items, meant for producing final output in the Greater Mekong Subregion (GMS). Results suggest that GMS countries are exporting finished items to China, that are increasingly getting manufactured using primary and intermediate inputs imported from China.
Details
Keywords
Nilanjan Banik and John Gilbert
In a dynamic extension of the reciprocal dumping approach, oligopolistic firms producing imperfect substitutes use the carrot and stick strategy to enforce cooperative behavior…
Abstract
In a dynamic extension of the reciprocal dumping approach, oligopolistic firms producing imperfect substitutes use the carrot and stick strategy to enforce cooperative behavior. When dumping occurs, firms lobby for tariffs as punishment. After a finite punishment period, the non-dumping equilibrium is restored. Conditions are derived on the degrees of substitutability and observability that allow non-dumping under an infinite horizon. The model suggests the degree of substitutability between goods and the market interest rate, affect the likelihood of dumping.
Details
Keywords
Khanindra Ch. Das and Nilanjan Banik
The purpose of this paper is to examine the motivations behind Indian firms’ outward investment, i.e. whether these firms are investing abroad in search of market, resource…
Abstract
Purpose
The purpose of this paper is to examine the motivations behind Indian firms’ outward investment, i.e. whether these firms are investing abroad in search of market, resource, technology, strategic-assets, efficiency, etc. Outward FDI by Indian firms has increased considerably in recent years. Such investments have gone to more than hundred host countries and into various sectors. The higher volume of outward FDI following policy reforms requires examination of factors that have motivated Indian firms to invest in different host countries.
Design/methodology/approach
The empirical analysis is done for the period from 2008-2009 to 2011-2012 using firm-destination panel data with appropriate adjustment for clustering.
Findings
The analysis provides evidence of the existence of multiple motives behind such investments. Indian firms are found to have invested abroad in search of resource, technology (strategic-assets) and efficiency, whereas the evidence on market-seeking motive is found to be at best weak in the empirical analysis. The results are robust to the use of alternative sample of outward investing firms.
Practical implications
This analysis of firm-level motivation of outward FDI by Indian multinationals has pertinent policy implications as well. The presence of multiple motives implies that Indian firms could bring multiple benefits to the Indian economy through outward FDI.
Originality/value
The link between outward FDI and host country factors is examined at the firm level as against at the aggregative level using a comprehensive and unique official database on actual outward FDI made by Indian firms, originating from both manufacturing and non-manufacturing sectors, in the form of equity and loan.