Multinational Enterprises and Technological Capability in Indian Industries:A Sector-wise Analysis after Liberalization

Multinational enterprises are considered as producers and carriers of advanced and sophisticated technologies. It is hypothesized that the technological effect on the productivity of foreign multinational firms through various technology sources should be higher than that of domestically owned firms. This study examines this hypothesis using data for 661 Indian manufacturing firms for the period from 1993 to 2004. The study found that there is considerable heterogeneity in the impact of technological variables on the productivity of firms across industries. Technology import through licensing is found to be the most favorite channel of technology capability building among both domestic and foreign firms. The technological learning from exporting is significant in a few of the industry sectors for domestic firms. Surprisingly, the study does not show any significant own R&D efforts by both domestic and foreign firms in any of the industry sectors considered.