Institutional and economic determinants of Indian OFDI

Figures & data

Table 1. Variables used in the study

Variables	Sources
OFDI (USD million)	RBI overseas direct investment database
GDP (2015 USD million)	World Bank Database
GDP per capita (2015 USD million)	World Bank Database
Trade Openness (exports plus imports as % of GDP)	World Bank Database
Profit tax (% of commercial profits)	Work Bank Database
WGI (all six indicators)	Work Governance Indicators, World Bank
Ratio of ores & metals exports as a % of merchandise exports	World Integrated Trade Solutions (WITS) database
Total count of patent and trademark applications filed by the residents	World Intellectual Property Organization (WIPO)database, UN.

Figure 1. India’s OFDI trend (2008–2018).

The graph displays the declining trend of Indian OFDI in developed nations and increasing trend of Indian OFDI in developing nations over 2008–2018.

Table 2. Descriptive statistics of developing nations

Variable	Obs	Mean	Std. Dev.	Min	Max
OFDI	891	113.243	684.198	0.000	10,888.91
lnGDPsum	891	28.714	0.543	27.832	30.780
lnGDPpcDiff	891	8.280	1.277	2.602	11.357
TO	891	0.252	0.570	8.200	4.107
VADiff	891	−0.907	0.768	−2.670	0.828
PSDiff	891	0.655	0.954	−2.177	2.737
RQDiff	891	0.030	0.765	−2.056	2.681
RLDiff	891	−0.376	0.728	−1.950	1.924
CCDiff	891	0.027	0.803	−1.442	2.669
GEDiff	891	−0.323	0.785	−2.514	2.456
lntax	849	3.658	0.513	2.230	5.655
lnmetal	891	1.360	1.207	0.000	4.409
lnpatent	891	5.403	4.402	0.000	15.958
OFDI	286	214.602	599.736	0.000	3978.473
ln GDPsum	286	52.833	1.970	46.651	58.887
ln GDPpcDiff	286	10.474	0.575	9.085	11.546
TO	286	0.408	0.648	0.004	3.357
ln Patent	286	9.627	2.376	0.000	13.114
ln tax	286	3.738	0.317	2.912	4.283
Metals	286	4.543	5.892	0.799	38.222
VA diff	286	0.780	0.323	−0.121	1.344
PS diff	286	1.901	0.462	0.69	2.810
RQ diff	286	1.698	0.455	0.45	2.400
RL diff	286	1.379	0.582	−0.100	2.190
CC diff	286	1.708	0.791	0.030	2.940
GE diff	286	1.321	0.588	−0.420	2.390

Table 3. Correlation of developing nation

	OFDI	lnGDPsum	lnGDPpcDiff	TO	VADiff	PSDiff	RQDiff	RLDiff	CCDiff	GEDiff	ln tax	lnmetal	lnpatent
	lnGDPsum	lnGDPpcDiff	TO	lnpatent	lntax	Metals	VADiff	PSDiff	RQDiff	RLDiff	CCDiff		GEDiff
OFDI	1.000
lnGDPsum	0.154	1.000
lnGDPpcDiff	0.279	0.506	1.000
TO	0.266	0.519	0.376	1.000
VA Diff	0.028	−0.051	0.193	−0.187	1.000
PS Diff	0.246	−0.040	0.384	0.141	0.881	1.000
RQ Diff	0.375	0.322	0.544	0.273	0.628	0.747	1.000
RL Diff	0.358	0.258	0.578	0.279	0.765	0.680	0.876	1.000
CC Diff	0.388	0.135	0.450	0.261	0.716	0789	0.797	0.929	1.000
GE Diff	0.414	0.382	0.590	0.371	0.842	0.821	0.875	0.919	0.886	1.000
lntax	−0.188	−0.078	−0.341	−0.196	−0.071	−0.312	−0.421	−0.455	−0.403	−0.399	1.000
Metals	−0.044	0.046	−0.002	−0.056	0.239	0.182	0.217	0.151	0.153	0.191	−0.113	1.000
lnpatent	0.115	0.606	0.310	0.260	0.112	0.085	0.327	0.253	0.175	0.392	0.038	0.140	1.000
lnGDPsum	1.000
lnGDPpcDiff	0.304	1.000
TO	0.592	0.369	1.000
lnPatents	0.558	0.415	0.431	1.000
lntax	0.326	0.272	0.298	0.311	1.000
Metals	0.012	0.175	0.061	0.223	0.096	1.000
VA Diff	−0.527	0.362	−0.519	0.424	−0.088	0.141	1.000
PS Diff	−0.609	0.215	−0.528	0.437	−0.247	0.133	0.826	1.000
RQ Diff	−0.529	0.279	−0.506	0.416	−0.372	0.178	0.962	0.875	1.000
RL Diff	−0.449	0.420	−0.536	0.442	−0.281	0.176	0.971	0.859	0.963	1.000
CC Diff	−0.302	0.593	−0.347	0.464	−0.252	0.245	0.907	0.714	0.891	0.951	1.000
GE Diff	−0.383	0.508	−0.449	0.470	−0.273	0.169	0.936	0.812	0.916	0.933	0.956		1.000

Table 4. PPML estimation—developed nations

Variables	Resource Seeking			Strategic Asset Seeking		Efficiency Seeking		Market Seeking
	VA	PS	CC	RQ	CC	RQ	CC	RQ	CC
	Model 1	Model 2	Model 3	Model43	Model 5	Model 6	Model 7	Model 8	Model 9
ln(GDPsum)ijt	1.717 (1.432)	1.782 (1.387)	1.770 (1.375)	1.683 (1.396)	1.604 (1.352)	1.609 (1.371)	1.519 (1.351)	1.458 (1.380)	1.509 (1.351)
ln(GDPpc)ijt	2.221** (0.978)	2.724*** (1.027)	2.396** (1.001)	2.578* (1.023)	2.405** (1.010)	1.973* (1.012)	2.395** (1.009)	2.616** (1.010)	2.401** (1.010)
TOjt	0.473* (0.318)	0.605** (0.296)	0.546* (0.303)	0.455** (0.304)	0.519* (0.312)	0.443* (0.303)	0.518* (0.311)	0.449** (0.303)	0.518* (0.312)
lnNResources	0.028 (0.014)	0.123 (0.081)	0.024 (0.016)	0.174 (0.088)	0.118 (0.084)	0.177* (0.088)	0.118 (0.084)	0.174** (0.088)	0.117 (0.084)
lnPatents	0.133 (0.108)	0.190 (0.107)	0.168 (0.107)	0.203 (0.109)	0.176 (0.108)	0.110 (0.118)	0.158 (0.111)	0.111 (0.117)	0.158 (0.111)
lnTaxjt	-0.157 (0.571)	-0.631 (0.610)	-0.511 (0.619)	-0.394 (0.591)	-0.634 (0.647)	-0.361 (0.596)	-0.620 (0.646)	-0.361 (0.594)	-0.621 (0646)
Resource* VA	0.337*** (0.084)	-	-	-	-	-	-	-	-
Resource* PS	-	0.202** (0.114)	-	-	-	-	-	-	-
Resource* CC	-	-	0.197*** (0.053)	-	-	-	-	-	-
Strategic * RQ	-	-	-	0.043** (0.018)	-	-	-	-	-
Strategic * RL	-	-	-	-	0.181** (0.072)	-	-	-	-
Efficiency * RQ	-	-	-	-	-	0.047** (0.018)	-	-	-
Efficiency* CC	-	-	-	-	-	-	0.091** (0.009)	-	-
Market * RQ	-	-	-	-	-	-	-	0.218** (0.003)	-
Market * CC	-	-	-	-	-	-	-	-	0.731** (0.351)
Constant	17.326 (38.300)	15.109 (32.198)	17.615 (37.690)	-11.914 (36.832)	12.127 (36.321)	11.630 (36.450)	12.404 (36.335)	-11.317 (36.688)	12.076 (36.327)
Observations	286	286	286	286	286	286	286	286	286
Time Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Country Fixed Effect	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table 4a. PPML Estimation -Developed Nations: Interaction Effect

	VA	PS	RQ	RL	CC	GE
	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
ln(GDPsum)ijt	1.736 (1.436)	1.798 (1.429)	1.683 (1.372)	1.641 (1.447)	1.713 (1.551)	1.769 (1.365)
ln(GDPpc)ijt	2.512** (1.113)	2.648** (1.039)	1.644** (1.003)	2.338** (1.006)	2.405** (1.009)	2.381** (1.021)
TOjt	0.504** (0.319)	0.582** (0.294)	0.447** (0.303)	0.519* (0.313)	0.523* (0.311)	0.524* (0.314)
lnNResources	0.101 (0.088)	0.123 (0.081)	0.176 (0.088)	0.121 (0.084)	0.118 (0.085)	0.115 (0.074)
lnPatents	0.164 (0.108)	0.181 (0.110)	0.173 (0.117)	0.187 (0.113)	0.168 (0.111)	0.155 (0.081)
lnTaxjt	-0.453 (0.620)	-0.659 (0.626)	-0.352 (0.593)	-0.608 (0.646)	-0.619 (0.646)	-0.597 (0.644)
Ins.Qtyjt	0.724 (0.164)	0.332 (0.190)	0.517** (0.203)	0.124 (0.130)	0.376** (0.099)	0.085 (0.129)
Constant	36.602 (16.171)	31.955 (17.756)	-31.949* (16.526)	26.511 (16.253)	(25.139 (16.316)	29.019 (16.68)
Observations	286	286	286	286	286	286
Time FE	Yes	Yes	Yes	Yes	Yes	Yes
Country FE	Yes	Yes	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table 5. PPML Estimation – Developing Nations

	VA	PS	RQ	RL	CC	GE
	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
ln(GDPsum)ijt	1.902** (1.345)	1.892** (1.310)	2.088** (1.353)	2.163** (1.307)	1.930** (1.342)	2.047** (1.342)
ln(GDPpcDiff)ijt	-0.885 (0.673)	-0.748 (0.625)	-0.826 (0.674)	-0.847 (0.556)	-0.810 (0.611)	-0.841 (0.657)
TOjt	0.139 (0.149)	0.125 (0.162)	0.077 (0.158)	0.184 (0.144)	0.145 (0.144)	0.113 (0.140)
lnNResources	0.004 (0.021)	0.002 (0.021)	0.006 (0.020)	0.010 (0.020)	0.004 (0.021)	0.006 (0.020)
lnPatents	-0.020 (0.062)	-0.051 (0.061)	-0.029 (0.052)	-0.031 (0.055)	-0.015 (0.062)	-0.018 (0.060)
lnTaxjt	1.693*** (0.791)	1.799***(0.636)	1.744** (0.659)	1.795** (0.662)	1.748** (0.693)	1.565** (0.732)
Ins.Qtyjt	0.603 (0.464)	0.084 (0.009)	0.477 (0.605)	0.837 (0.962)	0.164 (0.466)	0.369 (0.451)
Constant	-42.898* (21.112)	-33.436 (17.854)	-11.976 (19.790)	-31.841 (7.545)	-34.716 (6.037)	-41.568 (13.992)
Observations	891	891	891	891	891	891
Time FE	Yes	Yes	Yes	Yes	Yes	Yes
Country FE	Yes	Yes	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table 5a. PPML Estimation -Developing Nations: Interaction Effect

Variables	Market Seeking		Resource Seeking
	RQ	RL	VA	PS
	Model 1	Model 2	Model 1	Model 2
ln(GDPsum)ijt	2.058** (1.344)	2.162** (1.295)	1.924** (1.327)	1.522** (1.230)
ln(GDPpc)ijt	-0.992 (0.680)	-0.851* (0.674)	-0.781 (0.696)	-0.828 (0.719)
TOjt	0.091 (0.057)	0.090 (0.145)	0.101 (0.159)	0.154 (0.144)
lnNResources	0.005 (0.020)	0.009 (0.020)	0.008 (0.005)	0.007 (0.005)
lnPatents	-0.027 (0.053)	-0.031 (0.055)	-0.018 (0.060)	-0.016 (0.059)
lnTaxjt	1.847*** (0.655)	1.808*** (0.657)	1.755** (0.661)	1.795** (0.619)
Market* RQ	0.017*** (0.001)	-	-	-
Market* RL	-	0.014** (0.006)	-	-
Resource* VA	-	-	-0.025* (0.017)	-
Resource* PS	-	-	-	-0.024* (0.014)
Constant	-21.541 (29.325)	-24.714* (16.959)	-25.544* (18.679)	-29.462 (13.807)
Observations	891	891	891	891
Time Fixed Effects	Yes	Yes	Yes	Yes
Country Fixed Effect	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table 6. Robust PPML Estimation- Developed nation without USA

	VA	PS	RQ	RL	CC	GE
	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
ln(GDPsum)ijt	1.819 (1.695)	1.915** (1.553)	1.907** (1.352)	1.575 (0.961)	1.525 (0.984)	1.641 (1.096)
ln(GDPpc)ijt	2.318** (1.655)	2.709*** (1.422)	2.324*** (1.320)	2.789*** (1.374)	2.973*** (1.413)	2.375*** (1.403)
TOjt	0.971*** (0.365)	0.906** (0.367)	0.747** (0.347)	0.850** (0.358)	0.839** (0.357)	0.869** (0.354)
lnNResources	0.047 (0.082)	0.102 (0.087)	0.159* (0.084)	0.107 (0.084)	0.098 (0.084)	0.090 (0.084)
lnPatents	0.101 (0.125)	0.258 (0.112)	0.161 (0.119)	0.183 (0.119)	0.212 (0.117)	0.215* (0.117)
lnTaxjt	0.229 (0.617)	-0.085 (0.538)	0.282 (0.515)	-0.053 (0.583)	-0.018 (0.588)	0.030 (0.582)
Ins.Qtyjt	0.740 (0.586)	0.323 (0.189)	0.765*** (0.238)	0.330 (0.167)	0.184** (0.123)	0.217 (0.161)
Constant	16.424 (37.470)	59.837 (36.867)	44.441 (41.104)	53.009 (34.951)	56.066 (35.378)	58.282 (35.716)
Observations	275	275	275	275	275	275
Time FE	Yes	Yes	Yes	Yes	Yes	Yes
Country FE	Yes	Yes	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table 6a. Robust PPML Estimation -Developed Nations without USA: Interaction Effect

Variables	Resource Seeking				Strategic Asset Seeking			Efficiency Seeking		Market Seeking
	VA	PS	RQ	CC	RQ	RL	CC	RQ	CC	RQ	CC
	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6	Model 7	Model 8	Model 9	Model 10	Model 11
ln(GDPsum)ijt	1.784 (1.595)	1.701 (1.486)	1.799 (1.496)	1.544 (1.527)	1.864 (1.344)	1.422 (1.444)	1.564 (1.471)	1.568 (1.357)	1.545 (1.488)	1.902 (1.351)	1.524 (1.483)
ln(GDPpc)ijt	2.104 (1.582)	2.060*** (1.410)	2.135*** (1.366)	2.129*** (1.389)	2.055*** (1.323)	2.808*** (1.352)	2.987*** (1.392)	2.543*** (1.330)	2.659*** (1.417)	3.098*** (1.322)	2.965*** (1.412)
TOjt	0.809** (0.345)	0.951*** (0.328)	0.942*** (0.312)	0.910*** (0.338)	0.759** (0.344)	0.854** (0.357)	0.838* (0.356)	0.742** (0.350)	0.839** (0.359)	0.751** (0.346)	0.839** (0.357)
lnNResources	0.169 (0.140)	0.086 (0.080)	0.146 (0.075)	0.122 (0.087)	0.168* (0.083)	0.113 (0.084)	0.104 (0.084)	0.160* (0.084)	0.098 (0.084)	0.159* (0.084)	0.098 (0.084)
lnPatents	0.147 (0.114)	0.302 (0.107)	0.270 (0.105)	0.253 (0.108)	0.320 (0.103)	0.259 (0.106)	0.262 (0.108)	-0.163 (0.119)	-0.213* (0.117)	0.162 (0.118)	0.212 (0.116)
lnTaxjt	-0.242 (0.522)	-0.123 (0.495)	-0.259 (0.486)	-0.250 (0.535)	-0.305 (0.506)	-0.243 (0.574)	-0.103 (0.581)	-0.280 (0.515)	-0.118 (0.588)	-0.289 (0.516)	-0.015 (0.588)
Resource* VA	0.446*** (0.092)	-	-	-	-	-	-	-	-	-	-
Resource* PS	-	0.040** (0.017)	-	-	-	-	-	-	-	-	-
Resource* RQ	-	-	0.045* (0.019)	-	-	-	-	-	-	-	-
Resource* CC	-	-	-	0.017* (0.011)	-	-	-	-	-	-	-
Strategic * RQ	-	-	-	-	0.076*** (0.022)	-	-	-	-	-	-
Strategic * RL	-	-	-	-	-	0.034* (0.015)	-	-	-	-	-
Strategic * CC	-	-	-	-	-	-	0.020* (0.011)	-	-	-	--
Efficiency * RQ	-	-	-	-	-	-	-	0.070*** (0.021)	-	-	-
Efficiency* CC	-	-	-	-	-	-	-	-	0.016** (0.011)	-	-
Market * RQ	-	-	-	-	-	-	-	-	-	0.013*** (0.004)	-
Market * CC	-	-	-	-	-	-	-	-	-	-	0.003** (0.002)
Constant	40.422 (38.058)	50.634 (34.763)	38.978 (35.187)	49.148 (35.835)	45.414 (31.544)	54.903 (34.443)	57.440 (35.026)	57.102 (32.331)	56.832 (35.520)	44.542 (32.044)	56.111 (35.330)
Observations	275	275	275	275	275	275	275	275	275	275	275
Time Fixed Effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Country Fixed Effect	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table 7. Robust PPML Estimation- Developing nations without Singapore & UAE

	VA	PS	RQ	RL	CC	GE
	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
ln(GDPsum)ijt	0.964** (0.142)	0.977** (0.442)	0.925** (0.464)	0.639 (0.341)	0.636* (0.312)	0.789* (0.232)
ln(GDPpc)ijt	-0.262 (0.457)	-0.575 (0.748)	-0.619 (0.792)	-0.806 (0.809)	-0.464 (0.693)	-0.708 (0.737)
TOjt	0.967 (0.591)	0.856 (0.655)	0.605 (0.603)	0.762 (0.623)	0.912 (0.598)	0.782 (0.592)
lnNResources	0.013 (0.024)	0.005 (0.023)	0.007 (0.011)	0.011 (0.023)	0.007 (0.024)	0.006 (0.024)
lnPatents	-0.057 (0.063)	-0.042 (0.061)	-0.090 (0.040)	-0.056 (0.055)	-0.0311 (0.068)	-0.044 (0.059)
lnTaxjt	1.090* (0.637)	0.583* (0.485)	0.378* (0.199)	0.551* (0.365)	0.424* (0.327)	0.552 (0.683)
Ins.Qtyjt	0.340 (0.835)	0.289 (0.545)	2.714** (1.277)	1.302* (1.232)	1.103 (0.646)	1.080 (0.866)
Constant	55.110 (50.752)	-45.799** (13.249)	-43.151 (12.985)	-46.608 (38.338)	-48.54* (19.50)	-55.832 (31.512)
Observations	869	869	869	869	869	869
Time FE	Yes	Yes	Yes	Yes	Yes	Yes
Country FE	Yes	Yes	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table 7a. Robust PPML Estimation -Developing Nations without Singapore & UAE (Interaction Effect)

Variables	Market Seeking			Resource Seeking
	VA	RQ	CC	VA	PS
	Model 1	Model 2	Model 3	Model 4	Model 5
ln(GDPsum)ijt	0.761* (0.001)	0.812** (0.024)	0.813** (0.069)	0.841** (0.601)	0.845** (0.529)
ln(GDPpc)ijt	-0.612 (0.688)	-0.357 (0.693)	-0.463 (0.694)	-0.956 (0.753)	-0.770 (0.956)
TOjt	0.963* (0.582)	0.692 (0.594)	0.900* (0.595)	0.895 (0.647)	0.681 (0.623)
lnNResources	-0.010 (0.024)	-0.005 (0.024)	-0.007 (0.024)	0.028 (0.024)	0.056 (0.040)
lnPatents	-0.059 (0.064)	-0.040 (0.065)	-0.031 (0.068)	-0.035 (0.067)	-0.033 (0.062)
lnTaxjt	0.939* (0.634)	0.963* (0.685)	0.919** (0.726)	0.443* (0.369)	0.441** (0.356)
Market* VA	0.042*** (0.014)	-	-	-	-
Market* RQ	-	0.010** (0.004)	-	-	-
Market*CC	-	-	0.020* (0.011)	-	-
Resource* VA	-	-	-	- 0.077** (0.037)	-
Resource* PS	-	-	-	-	-0.029* (0.018)
Constant	-42.848 (29.649)	-57.709 (30.896)	-58.363* (33.367)	-41.665** (35.809)	-36.68* (21.495)
Observations	869	869	869	869	869
Time Fixed Effects	Yes	Yes	Yes	Yes	Yes
Country Fixed Effect	Yes	Yes	Yes	Yes	Yes

Note: Std. errors in parenthesis. ***, ** and * indicates significance of coefficients at 1%, 5% and 10%, respectively

Table A1. List of Developed & Developing Nations

Australia Austria Belgium Canada Croatia Czech Republic Denmark Estonia Finland France Germany Greece
Ireland Italy Japan Lithuania New Zealand Norway Poland Portugal Romania Spain Sweden Switzerland UK USA
Afghanistan Algeria Argentina Azerbaijan Bahamas Bangladesh Barbados Belarus Benin Bhutan Bolivia Botswana
Brazil Burkina Faso Cambodia Central African Republic Chad Chile China Columbia Congo Iran Dominican Republic
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