Outward FDI and Knowledge Flows: A Study of the Indian Automotive Sector

In recent years developing countries have emerged as significant participants in the OFDI (outward foreign direct investment), seeking strategic assets. Such asset exploiting-cum-augmenting OFDI involves potential twoway cross-border knowledge flows. This study examines several dimensions of OFDI in the Indian automotive industry – currently internationalizing rapidly in terms of OFDI. This study undertakes a quantitative analysis of the influence of OFDI activities on the in-house (domestic) R D performance of the Indian automotive firms during 1988-2008, and finds expected favourable impact on the R D intensity. The study concludes with suggestions to promote OFDI, particularly the strategic asset enhancing OFDI.