• search

Japanese FDI in India perform better than US

Written by: Staff

Mumbai, Sep 10: Japanese firms are found to perform financially better than US firms on the front of FDI (foreign direct investment) in India, says an award winning study by Dr Rashmi Banga.

Reasoning it, the study says that Japanese affiliated firms are found to have lower scale of operation but higher output growth.

Moreover, Japanese firms have higher technology adoption when compared to the US firms. It is despite the fact that the US affiliated firms use more capital-intensive techniques and are more adjusted to the Indian financial environment, says the study.

A New Delhi based economist, Ms Banga is the winner of Exim Bank International Economic Development Research Annual (IEDRA) award for 2005, for her doctoral dissertation titled 'The nature, pattern and impact of Japanese and US FDI in Indian manufacturing'. The award was conferred on her recently in Mumbai by S T Devare, who is the visiting senior research fellow at Institute of Southeast Asian Studies, Singapore, in presence of the bank CMD, T C Venkat Subramanian. The period of her period of study is 1994-95 to 1999-2000.

The study has revealed many more facts that say how Japanese firms are better than US firms while putting their money in India.

Japanese firms have higher institutional shareholding and lower individual shareholding. More of the equity is tied to the fixed assets and the proportion of fixed assets to total asets is also higher. Moreover, Japanese firms are highly geared, though the debts are less risky. Loans from foreign sources are higher. While US firms, like Indian ones, are more equity oriented.

Referring to Kojima's view, the study says that Japanese type FDI is more export-oriented when compared to American-type FDI that is export-substituting in nature. Making policy suggestions on the topic the study talks for making FDI more inter-linked with domestic firms for greater export spillovers.

Finally making a cautionary note, the study says that before entering into bilateral negotiation, the impact of FDI from particular source must be analysed.


For Daily Alerts

For Breaking News from Oneindia
Get instant news updates throughout the day.

Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more