Foreign Direct Investment by Indian Firms: A Study of Resource and Strategic Asset Seeking

Abstract

India’s internationalization through outward foreign direct investment (OFDI) has registered an increase since the liberalization, privatization and globalization policies in the 1990s. The present study analyses the resource and strategic asset-seeking motivation of OFDI originating from India. The study considers host developing countries based on the categorization followed by the United Nations Conference on Trade and Development in its publication, the World Investment Report. A longer period
of OFDI data 2001-2014 than other studies of India’s OFDI has been considered. The study seeks to analyse the significance of resource-seeking motivation of India’s OFDI even to the developed region. The study empirically tests whether India’s OFDI is resource and strategic asset seeking by adopting a panel data methodology. The result of the panel cointegration test shows that India’s OFDI is positively associated with host countries that have more resources, across both developing and developed countries and strategic assets in the developed region.