Horizontal and Vertical Technology Spillover of Foreign Direct Investment: An Evaluation across Indian Manufacturing Industries

This paper explores the horizontal and vertical technology spillover effect of foreign direct investment (FDI) across Indian manufacturing industries. On the basis of Pedroni cointegration tests, we find that technology spillovers can be transmitted via all kinds of intermediate factors. We find that the horizontal foreign presence and inter-industry foreign presence have exclusive penetration effect to spur labor productivity and technology spillover across Indian industries. Furthermore, intermediate factors like technology import intensity, inter-industry technology import intensity, R&D intensity and inter-industry R&D intensity promote technology spillover and labor productivity across Indian manufacturing industries.