Sei sulla pagina 1di 31

FOREIGN DIRECT INVESTMENT AND EXPORT COMPETITIVENESS:

AN ANALYSIS FOOD PROCESSING INDUSTRY OF INDIA

Smruti Ranjan Behera*

* Mphil research scholar, University of Delhi, Department of Business Economics, South Campus. I am thankful to my Supervisor Dr. Deepa Saran, for her sincere and helpful comment. The author can be contacted by email-behera_smruthi@rediffmail.com.

FOREIGN DIRECT INVESTMENT AND


1

EXPORT COMPETITIVENESS:
AN ANALYSIS FOOD PROCESSING INDUSTRY OF INDIA

Abstract:
The present study has analyzed the export competitiveness of food processing industry of India after liberalization. The present study explore the competitive performance and export import trends of the six foremost branches of the agro-based food products and processed food products after the economic reforms. The role of FDI in the food processing industry has been examined by doing the panel data analysis of Fixed Effects and Random Effects models. The export competitiveness of the food processing industry are examined by taking the inter country trade between India USA with India UK, because both are major importers of the Indian processed food items. In order to measure the competitiveness of the processed food items in USA and UK market the present analysis has taken GDP of the importing countries of both USA and UK, Real Effective Exchange Rate between India USA with India UK and Relative share of FDI from USA and UK to the food processing industry of India are taken to be considered as the exogenous variables. The relative and percentage share of processed food exports to both USA and UK are taken as endogenous variables. The result suggests that FDI have significant positive effect on export competitiveness of food processing industry of India.

JEL Code: F21, F23 and O53 Key Words: Foreign Direct Investment (FDI), Export Competitiveness, Multinational Corporations (MNCs) and Panel Data Analysis.

FOREIGN DIRECT INVESTMENT AND EXPORT COMPETITIVENESS:

AN ANALYSIS FOOD PROCESSING INDUSTRY OF INDIA Introduction: The impact of the international investment and multinational enterprises (MNEs) on host countries are now becoming a relatively new area which is being taken into consideration. It is evident that the symbiotic role between economic integration and FDI has yet to be fully analyzed and more so the issue of policy towards MNEs. We are already a long way forward of the time when the debate on inward foreign investment was highly polarized between the proponents of foreign investment as an engine of development. Hence, today all developing economies are more interested for welcoming foreign capital and competition among them is going to be rife. FDI is coming by way MNCs and it is penetrating the developing countries markets with spill over effects. Therefore, the challenging area of business research is the relationship and operation of MNCs on host economy especially in the developing countries. FDI inflows are expected to be less volatile and non-debt creating than FII. The export-oriented FDI is preferred to remove the balance of payments constraint on the process of development. Investment by MNEs in R & D activity in host countries can contribute to the growth of local capabilities of creating the spillovers of knowledge within the host economies. Therefore, the qualities of the FDI for the developing countries depend upon the types and patterns of the FDI inflow, up-to what extent the value added to the developing countries depends upon the types of FDI received. The relative importance of classical food products such as coffee, tea, sugar, cocoa and so on have sharply declined due to the rapid expansion of trade in products like fruits and vegetables, poultry, fish and dairy products which are exported after technologically sophisticated processing. These new dynamic products are referred to as processed foods product. Since Processed food items undergo substantial processing before being exported are of typically high value. After processing the food items value addition of the products is going to be changed. Therefore, subject to more stringent food safety standards. While international trade of processed food products is not new and its trade is experiencing very rapid expansion in recent years, they are often referred as new food exports or nontraditional food exports. In order to maintain focus on new processed food exports the traditional beverages such as tea, coffee and cereals grains as wheat, maize, rice and other bulk of them are excluded from the definition of processed food regardless of the degree of processing involved.( Athukorala and Sen, 1998).

Food-processing industry is one of the leading industries in manufacturing industries, which can increase it is potentiality in exports in the world trade. According to Kalia, (2003) if India wants to be the largest food-processing industry as it contemplates it has still miles to go. Our productivity and the capacity utilization in food processing industries are at low levels in comparison to the other Asian Countries. The food-processing industry is one of the leading sectors in the manufacturing sector, which can reach high level of development and become export competitive if we improve our value addition up to certain extent. This value addition in the food processing industry in India was only 7% to total food production as compared to 23% in China and 45% in Philippines and 88% in UK in the year of 1991. Indian food industry is characterized by the small and unorganized sector that accounts for 75% of the total industry (Baisya, 2004). Despite all the above facts, the food-processing sector is profitable for the emerging markets like India because the food-processing sector gets place after communication. India is one of the largest producers of raw material for the food processing industry in the world but the industry itself is not fully developed until now. The value addition in the Indian foodprocessing sector is very low as compared to other developed nations; if the interest is shown by the domestic corporate sector as well as transnational corporations in setting up the food processing units India can then be an important player in the international market for the processed food products. The government has already approved about 343 proposals which are either for 100 percent export oriented food processing unit or joint venture in the early period of 1990s. This would involve an investment of Rs. 30,040 million (about US$100 million) including foreign investment worth of Rs. 7,880 million (Kalia, 2003). The foreign investment has been coming mostly for processing of mushrooms, manufacture of banana paste, fruit pulp and juice concentrate and in ventures like dehydration of fruits and vegetables and instantaneous freezing of fresh fruits and juice (Mehta R., 2002). Joint ventures and FDI in the food-processing industries are coming from many countries among them the important countries are USA, UK, Netherlands, Switzerland and Germany. The proposals are in the field like technology transfer, financial or marketing tie-ups between the locally owned firms and the foreign firms. MNCs have their own interest and long-term vision in the food processing industries in order to earn profit and have large export share in the international market. They have their own technological advantage over their domestic

counterparts and have the criteria of sustainability over a long duration of time. This is demonstrated by the large global and transnational corporations like Kellogg and Pepsi. The first section of this paper analyzes the above introduction part. The second section of the study analyze brief review of literature, third section discusses about trends pattern of FDI coming into the different sector of India. Fourth section presents objective research methodology and data sources of the paper. The fifth section of this study contains the analysis and interpretation of results and ultimately sixth section of this study give discussion regarding conclusion and recommendations.

Section-2
Brief review of literature Kozokiyota and Shujiro (1998) explained the inward and outward trend of FDI into the food processing industry of Japan. By using data of export and import from the Ministry of Finance of Japan, they found that the inward foreign investment into Japanese food sector was lower than the Japans outward investment into the food-processing sector. They analyzed two types of linkages regarding the FDI and trade which was linkage between the Japanese firms and foreign firms. They analyzed and compared between the joint-affiliated firms and the locally owned firms with respect to export share in international market. The study used gravity regression analysis to examine the linkages between FDI and trade in the Japanese food sector with data taken from the ministry of finance (MOF). Another study by Shirstake (1996) indicate that multinational companies in the food sector accounted a great deal in the international trade and import large amount of products from their overseas affiliates. This study conducted by Wondu Holdings (2000) observed a comparative analysis between the effect of foreign ownership in the food processing sector and operation of the outbound foreign investment in the food and fiber enterprises. The study focused regarding the foreign and locally owned firms to the supply chains and the effect of foreign ownership on the competitiveness of Australian trade in food and fiber products. The estimate did not consider the transfer pricing mechanisms for shifting of resources between the affiliates and head office. Sheridan (1975) reported the evidence of transfer pricing in Australia through overcharging fees and royalties paid by the foreign affiliated firms to the parents, but it could not show the evidence of how important it was at that time. The study was based on trade and investment orientation of the foreign and locally owned respondent groups/firms. In order to get a 5

measurement of the corresponding responses, they used binary logistic regression and generalized linear regression model for their study. Binary regression models have to perform logistic regression on binary response variables. Binary variables have only two possible values such as market orientation indicated by the presence or absence of domestic sector with foreign sector and export. Ultimately, they came to conclusion that the foreign owned firms in Australia were more export oriented in comparison to the locally owned firms. This in turn appears to be associated with the economies of scale and a capacity and willingness to restructure the workplaces Mehta and George (2003) explained the processed food export of Indian food processing industry and it was disrupted by SPS measures of the developed countries. The SPS measures became too stringent resulting in contraction of the agricultural exports which would be a negative impact upon the processing of agricultural products. The study pointed out that the removal or relaxation of overly stringent SPS regulations can generate welfare gains to the consumers. If the restrictions will be severe, the majority of developing countries producers or manufacturers are exporting agro-based products cannot effectively access the developed country market. Ray Trewin, 1995 explained that the Japanese food market was changing dramatically over the past two decades due to several reasons. The western preferences of food habits were going to be popular in Japanese market for which the share of Australian export to the Japan had declined after 1995. The import of the processed food products increased due to a number of factors in the Japanese supply side economy (e.g. a loss of Japanese competitiveness) and demand side (e.g. taste shifting to western foods) which might be one of the significant factor for Japanese and overseas producers (Ray Trewin). Japan import share from food processing industry was a useful way to examine the change in trade and competitiveness of the product. Hence, Stern (1967) analyzed the factors from the supply and demand side and it could act through shifting of market share. The demand side factors like world demand; the commodity composition of the import demand and the geographic distribution of world trade are individually measured and composed across the exporters. The supply side factors are more difficult to determine. They are measured by taking together the residuals from the demand side and which is referred as the competitiveness effect. Thus, according to Stern competitiveness which includes price, quality, new products promotion and marketing arrangement? It requires sufficient time series data which measure 6

their relative influences to the measurement of competitiveness effect. Another issue gives importance to the price related export value as against the alternative measure for export volume. Athukorala and Sen. (1998) studied the cross-sectional analysis of regression coefficients of different measures for countries growth in export of processed foods against the measurement of openness, resource endowments, income growth and population. According to them developing countries are rapidly increasing their exports like Koreas export to Australia. The population determinant would be significant and has positive coefficients at 1% level of income growth. Population had a significant effect on food exports. GNP growth was positive and had significant effect upon the food exports which would promote the relationship between export and economic growth. The multiple regression models was quite a good cross-sectional model because the R-squared was 52%, China and Zambia appeared to be highly influential in respect of their good performance and later on their poor performance. The impact of FDI on food processing industry is very important for a country like India. There exits a very few studies on the above subject of the role of FDI on food processing sectors. In this context this study tries to fill up this gap. Section-3 Sectoral Composition of the Foreign Direct Investment in India: The sectoral composition of FDI in India has undergone a significant change in the later part of 1990s. From the data set, only a few sectors of India could attract more foreign investment while the other sectors were lagging behind for attracting foreign investment. The three sectors namely electrical equipment, telecommunication and transportation industry command a share of above 10 percent of total FDI inflows (in rupee terms) among all the sectors of the manufacturing industries. The fuel and service sectors with the inclusion of above three leading sectors accounts for nearly one half (46.54%) of the total foreign investment coming into India. The sector which accounts for the highest share of FDI, 15.19% (in rupee terms) is the electrical equipment which includes computer software and electronics industry. Transportation is the next sector which accounts 11.29% of the total inflows and the next sector for highest FDI inflows is the telecommunications sectors which includes services such as basic telephone services, radio paging, cellular mobile etc. The private sectors participation in the telecom sector is high and so the technology are updating in rapid pace. The involvement

of the foreign technology is assuming a significant importance in the Indian economy after the economic reforms. Therefore, the domestic telecom companies have to be highly activated through the joint affiliation of MNEs in the host country, India. Between the top ten sectors of highest FDI inflows, oil, refinery and power, taken together form the energy sector, and are the next best alternative for attracting foreign direct investment in to India. Both the power and oil refinery sectors are opened to foreign investors up to 100% joint affiliation after the economic liberalization because oil and refinery are one of the profitable sectors which can boost largest export share and foreign exchange reserves in the current account of balance of payments. Table3.1 Top 10 Sectors Attracting Highest FDI Inflows, August 1991 to December 2004.
Ranks Sector

Amount Rupees in Crores (US $ in million)


Amount of FDI inflows % total 20022003 (April march) 20032004 (April march) 2449 (532) 1417 (308) 532 (116) 20042005 (April march) 2483 (540) 679 (148) 511 (111) Cumulative total (from 1991 August to inflows age of FDI (in

rupee terms)

December 2004) 16413 (3862) 12196 (2925) 11235 (2675) 10.40 11.29 15.19

Electrical equipments (including software and electronics)

3075 (644) 2173 (455) 1058 (223)

2 3

Transportation industry Telecommunications (Radio paging, cellular mobile, basic telephone services)

4 5

Fuels Power+ oil refinery Service sector (Financial financial) & non

551 (118) 1551 (326) 611 (129) 177 (37) processing

521 (113) 1235 (269) 94 (20) 511 (111)

633 (138) 996 (217) 860 (187) 154 (34)

10434 (2459) 9130 (2256) 6552 (1685) 4499 (1132)

9.66 8.45

6 7

Chemicals (Other than fertilizers) Food industries

6.06 4.16

8 9 10

Drugs pharmaceuticals Metallurgical industries

and

192 (40) 222 (47) 122 (26)

502 (109) 146 (32) 257 (56)

1331 (289) 808 (176) 1143 (248)

3540 (832) 2063 (485) 1868 (407)

3.28 1.91 1.73

Consultancy services

Source: News Letter Various Issues, DIPP, Ministry Of Commerce and Industry.*(Rs in Crores)

Fig -3.1: Percentage of total Foreign Direct Investment in different industries (Rs).
%of total FDI inflows (in rupee terms)

electrical equipments
1.73 1.91 3.28 4.16 6.06 8.45 9.66 10.4 11.29 15.19

trnasportation industry telecommunications fuels services sector chemicals food processing drugs and pharmaceuticals metallurgicals industries consultancy services

Table-3.2: Statement on Sector Wise FDI inflows: Food processing industry of India (From January 2004 to December 2004) (Amount in million)
Amount of FDI inflows Food processing (In Rs) 174.50 2314.41 57.74 1143.54 (in US$) 3.79 50.31 1.26 24.86 %age with total inflows 0.12 1.57 0.04 0.77

industries Food products Marine products Miscellaneous(food product)

Source: News Letter Various Issues, DIPP, Ministry Of Commerce and Industry.*(Rs in Crores)

From above table-3.1, the share of FDI in the food processing industries is only 4.16% out of the total inflows of FDI which is very negligible in comparison to other leading sectors of

Indian manufacturing industries. The percentage of total FDI inflows into different industries that is the last column of the table-3.1 has been shown in pictorial form. This will give a quick view of the percentage distribution of FDI in the top ten leading sectors for attracting highest FDI inflows. The total FDI inflows to the food processing sector was only US$ 3.79 million in 2004 and its percentage with total inflows was only 0.12% (table-3.2). In the year 2004 the inflows was US$1.26 million for the marine products and of the miscellaneous products it was US$ 24.86 million. Its share was 0.77 percentages out of total inflows to the food processing industry of India. And the total food products as a whole the share of inflows were 1.57% out of total inflows in million terms. The US $50.31 million of FDI inflows have gone to the food products in the year 2004. In the food processing industry, many MNCs were coming to India before pre reforms period but they were not getting success because of their short vision target. In the food processing industry only those MNCs who have long-term vision are getting success. The food processing industry of India is not fully commercialized until now as most of the foods are processed by individuals at their home and are sold on street stalls in India. The huge diversification of such processed food products is more delicious and good in quality in comparison to any packaged processed food products of any other countries. Section-4 4.1 Objectives and Scope of the Study Going through the literature on the Indian food processing industry it was observed that the demand of the Indian processed food products are increasing in the international market. Indian exporters are interested to increase their export share in the developed country market. India can become one of the leading exporters of the processed food products among developing countries and thus can increase its export share in the international trade. The Indian food processing industry is of great economic significance for the development of Indian economy because it creates vital linkages between the agriculture and the industry. The agriculture sector has 26% contribution towards the GDP of our country. The growth potential of Indias food industry is quite significant in terms of its value added. India is the worlds third largest food producer with the potential of becoming the number one during the next couple of years.

10

Looking at the potential of the food-processing sector we like to analyze its growth, exportimport trends and the structural pattern of the processed foods after 1990s is taken as the first objective of our study. The study will analyze the structural pattern and trends of export of the six foremost branches of agro-based food products after liberalization. The study does not include the marine products export. To study the export trends of Indian processed foods to the international market it is decided to study the export pattern over the period starting from 1991-92 to 200304, i.e., 13 years. The food processing industry itself is not fully developed and most of the food items are still being wasted. It was one of the dormant sectors until 1980s. Recognizing the potentiality of processed food in the international market Indian government took policy initiatives to modernize this industry. Government took various policy decisions in late 1980s and in early 1990s. It is therefore thought to conduct this study from 1991, which would give an idea of effects of policy changes, which were made in the late 1980s and early 1990s. The second objective of this study is to measure the competitive performance of the Indian food-processing industries after the economic reforms. In 2002-03 the export to USA was 264896.297million tons and export to the UK was 134923.442 million tons. Taken together, they constitute 8 percentages of the total export of the processed foods whereas the USA has 5 percentages and UK has 3 percentages of the share of the total processed food export from India (Mehta R., 2004). The competitiveness of the food-processing industries can be examined by taking the percentage increase in the share of the value of the export of this sector to the USA and UK after 1990s. The present study tries to examine the competitiveness of the processed food products of Indian food processing industry in the USA and UK markets because both are major importers of the Indian processed food items. The present study takes the real effective exchange rate as one of the explanatory variable in our model, which takes into account both relative prices and nominal exchange rate as factors affecting exports. Income of a country may affect its import demand. If real income increases then the demand for its import may also increase. Real GDP can be one of the explanatory variables which can affect the competitiveness of the products. Therefore, the study has taken real GDP as one of the explanatory variable in the model. 11

FDI inflow can increase the export competitiveness through technological advancement and increase in the efficiency of the factors of production which may lead to positive spill over effect. Relative share of FDI from USA and UK to the total inflow of FDI in the food processing industry of India has been taken as one of the explanatory variable. In estimating the share of FDI from USA and UK to Indias food processing industry we assume: (a) Percentage of total FDI from USA and UK going to the food processing sector, reflects the percentage share of total FDI in this sector( from all sources); (b) The share of total FDI going to the Indian food processing industry is the same for USA and UK. Hence, the present study considers the relative share of FDI from USA and UK to the food processing industry as one of the explanatory variable in our model. The study aims to explain the relationship between the relative share of processed food exports to the USA and UK (Export of the processing food products to USA and UK/ total processed foods export*100) and the real effective exchange rate, real gross domestic product of the importing countries and relative share of FDI from USA and UK to the food processing industry of India. This study on exports competitiveness is examined by using the panel data. 4.2 Research Methodology In order to examine the competitiveness of food-processing industry of India the exogenous variables are real GDP of the importing countries, share of the FDI from USA and UK to the food processing industry of India and the real effective exchange rate. The relative share of Indias processed foods export to UK and USA to its total export value has taken as endogenous variable, whose value is measured in terms of Rupees Crores. The competitiveness of the food processing industry is analyzed by using the panel data of Fixed effects and Random effects models. To examine the competitive performance of Indian food products in international market the present study has taken the inter country trade of India to USA and of India to UK. The theoretical framework of the Fixed effects and Random effects models are given below: Fixed effects: The basic model of panel data is: yit = i +'xit+ it ..(1) In this equation, there are k repressors in xit excluding the constant term. The individual effect is the term i which is taken to be constant over time t and specific for the specific individual 12

cross-sectional time unit i.

Therefore, this model represents a classical regression model

and if we take, the is to be same across all the units then ordinary least square method can give consistent and efficient estimates of both and . The fixed effects model takes is to be constant over time in the regression model. Random effects: In the random effect model the individual constant terms is randomly distributed across crosssectional units so the is are specified as the group specific disturbance term similar to it except that for each group it enters the regression model identically in each period. The Random effects model is: yit= + 'xit +ui +it .(2) In this model there are k repressors including the constant term. The component ui is the random disturbance term of i th observations and it is constant through out the time. We assume that E( it ) = 0 =E(ui) E(it2) =2 E( itjs) =0 if t s or i s E( ituj) = 0 Let wit = it +ui then the model (2) is represented as yit= + 'xit + wit (3) Where wi = (wi1, wi2, wi3,wit)' In addition, in view of this form of wit the model (3) is called as error component model. It follows the usual assumption as E(w2it) = 2 +2u , E(wit wis) =2u, t s. The functional form of our model is as given below: Model: X ij = X (GDPj, REERij, FDIji) .. (4) From the above model the equation is obtained which is relevant for the present study is: Xijt = i + 1GDPjt + 2 REERijt + 3FDI jit + w ijt.. (5) Where the subscripts i and j stands for the exporting country and importing country for the processed food products respectively. In this model, i take the value of only one exporting

13

country that is India in our case and subscript j stands for the importing countries USA and UK. is are coefficients of the explanatory variables and w represents the error term and the is are varies from one to three. X ijt: Indias relative share of processed food exports to the USA and U.K. to total processed food exports for the t-th year. (Export of the processed food products to USA and UK/ total processed foods export*100) GDPjt: Real GDP of the Importing Countries of USA and UK in year t (Real GDP= Nominal GDP/GDP Deflator) REERijt: Real effective exchange rate of i-th country India with respect to j-th country; USA and UK based on relative unit labor cost for the year of t-th (1995=100). [The REER between Rupees Verses Dollar= E (Rs/$) * P (USA)/ P (India)] FDIjit: Relative share of FDI from USA and UK to the food processing industry of India during the year t. We are assuming that the share of total FDI going to the food processing industry is the same for USA and UK. The share of FDI going to the food processing industry from USA and UK are varying year wise according to same variation of the total FDI (from all sources) to the food processing industry of India. (See Appendix, table-2) t stands for the period from year 1991 to 2004. The model in equation(5) can be estimated by Fixed effects model when ui are fixed in the model and Random effects model when ui are not fixed, that is random in the above model. In case of Fixed effects model OLS method can be applied for estimation and in case of Random effects model the GLS method can be applied for estimation. The Stata econometric software has been used for running the panel data analysis of Fixed effects and Random effects models. 4.3 Data Sources: The data has been collected from the secondary sources mainly from the Agro Processed Export Development Authority (APEDA) House library and from the library of the Ministry of Food Processing. The data regarding the food processing industries are also collected from the Food Processing Industries Annual Bulletin Report and from the Industrial Statistical Yearbook of UN. The data regarding Real Gross Domestic Product of the importing countries and Real Effective Exchange Rate has been taken from the UN Statistical Year Book (UNDP). 14

The sectoral distributions of FDI into the different industries are collected from RBI Bulletin Report and from the SIA News Letter Various Issues, DIPP, Ministry Of Commerce and Industry. Section-5 This section analyzes the export performance of the food processing industry after the economic reforms. It analyzes the structural pattern and export trends of the six foremost branches of agro-based food products and processed food products after liberalization. The present analyses do not include the marine products export. The period taken for this study is 1991-92 to 2003-04 that is 13 years and the market share that Indian food industry captures in the USA and UK economy will be analyzed during this period of time. This will give an idea of the effect of policy changes by the government of India after economic reforms. 5.1 The Performance of the Food Processing Industries after 1990s a) The competitive performance of the food industries can be analyzed by looking at the trends of the volume of processed foods exports to the different countries in international market. This will show the importance of the demand of the Indian processed food products at the international market/global market. There are two nationally recognized nodal agencies: Agricultural and Processed Food Export Development Authority (APEDA) and the Marine Products Export Development Authority (MPEDA). MPEDA is nodal authority through which all type of fish and fishery products are exported and other processed food products being exported by the APEDA House. The APEDA data sets provide the information regarding the processed food exports of India. The Figures of different foods and processed food items from an apex authority like APEDA House is expected to be the most comprehensive and informative, in comparison to other apex bodies. The export data sets regarding agricultural and processed food products from APEDA house can be identified into six broad areas as: 1) total floriculture and seeds, ( 2) total fresh fruits and vegetables, (3) total processed fruits and vegetables, (4) total animal products, (5) total other processed foods and (6) cereals Each category comprises of a number of related food products (see Appendix, table-1). Thus, the overall picture of the agricultural and total processed food exports are summations of six broad sub categories which are discussed below:

15

Trends of the volume of exports of all agricultural and processed food products are measured in value in Rs crores from the 1993-94 to 2002-03 are given in fig.-5.1 in the next page. i) During the period of 1993-94, the value of export was Rs 2849.2 crores and then it would increase to 7915.12 crores by the end of 1995-96. There was no radical change during 1993-94 to 1994-95. So the graph was constant over that period of time. After 1995-96, the export trend was declining till the end of 1997-98; initially it decreased by -2.4%, and then to -8.1%. After 1999-00, the trend is towards a continuous increase. ( see fig-5.1) In the year 1999-00, the export was 7365.36 crores and then it reached to Rs 9212.88 crores and Rs 10169.43 crores over the period of 2000-01 and 2001-02 respectively. Ultimately it touched to the highest point, Rs 13827.95 crores during the year of 2002-03.

Fig-5.1:

16

Total value of agricultural and processed foods exports, 1993-94 -2002-03


16000

14000

12000 value in rs crores

10000

8000

value

6000

4000

2000

0 1993-94 1994-95 1995-96 1996-97 1997-98 year 1998-99 1999-00 2000-01 2001-02 2002-03

Floriculture + Fresh Fruit and Vegetables + Processed Fruit and Vegetables +Cereals +Animal Products +Other Processed Foods . Value in (*Rs crores) Source: www.apeda.com

From the above Rs 6462.6 crores of exports have increased between the years 1999-01 to 2002-03. The export rises to 25% during the period of 1999-00 to 2001-02. From this it concluded that the export of the processed food was increased by 25%, and then it increased only by 10% in the next period. This implies that the export has increased after the year 2000 but not up to the level of earlier decade. From the above discussion it becomes clear that the value of exports had been increasing continuously after 1999s but before 1999s there were fluctuating trends in the value of exports. If we consider from 1993-94 there is no doubt that, the volume of export has increased to different countries. ii) Agricultural products like cereals group which include basmati rice, non basmati rice wheat and other cereals are exported to international market which was of Rs 7746.86 crores in 2002-03, it accounted nearly half of the total processed food exports.( Fig-5.2)

17

Fig-5.2: Category wise agricultural and processed foods exports 1993-94 -2002-03 9000

8000

7000 value in rs crores

6000

5000

4000

floriculture&seeds fruits&vegetables processed fruits&vege animal products other processed foods cereals

3000

2000

1000 0 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

year

Floriculture and Seeds +Fruits and Vegetables + Processed Fruits and Vegetables +Animal Products +Other Processed Foods +Cereals, Source: www.apeda.com

iii)

Other processed foods and total animal product exports were Rs 780 crores and Rs1501 crores respectively in 2001-02. Taken together they accounted one third of the total export earnings during the period of 2001-02, through APEDA facilitation. And during the period of 2003-03 the other processed products and animal products (Rs 1720.11 crores and Rs 1880.53 crores) accounted nearly one fourth of the total exports earnings.

iv)

Fruits, vegetables, processed fruits and vegetables account for one third of the total export earnings. Up to 1998-99, it increased slowly but the export earnings from fruits and vegetables were increasing at an increasing rate until 2002-03 (fig 5.2). Fresh processed fruits and vegetables show a remarkable growth but it accounts less than 10% of the total exports between the periods of 1996-97 to 2000-01.

v)

The total processed food product export showed faster growth as compared to the non-processed food product export between 1996-97 and 2001-02. The processed

18

fruits and vegetables categories had a recorded growth of 18.36% from 1996-97 to 2001-02. Hence, it allowed for improving its relative share from 6% to 11% among the six broad categories of processed food products. The processed food products comprised of several new product lines, which accounted 43% of the total exports earnings during 2001-02. vi) The cereals products in 1998-99 shows the rising tendency and reached to peak level, but ultimately it reached to highest 7746.80 crores during the year of 2002-03. Between 2000-01 and 2001-02 the fresh fruits and vegetables categories was the only group which shows a positive growth rate while processed fruits and vegetables (-8%) and animal products (-6.5%) recorded a sizable decline in growth rate. After that it increased to 19% (fig-5.2) during the later year of 2002-03. The fall in the exports of the above two groups were very interesting because, up to 2000-01 the two groups had shown a significant growth but after that it was decreasing until the end of the year 2001-02. vii) Other processed foods include groundnuts, guar gum. Jag grey and confectionary, cocoa products, cereals preparations, alcoholic and non- alcoholic beverages and miscellaneous preparations showed a perceptible increase of exports from 1993-94 onwards to 1996-97. During the period of 996-97, it was the highest level of export earnings of Rs 1835 crores, and then it showed a negative growth rate. From the above figure in the year of 2001-02, the aggregate exports earning shows negative growth in the food processing industry. The performance in case of floriculture and seeds from the export earnings viewpoint was very negligible because it constitutes about Rs 267 crores in the year 2002-03. Hence the total export earnings was 51 times more than the export earnings of the floriculture and seeds 5.2 Export- Import Analysis of the Food Processing Industries After 1990s From the previous discussion, we know the different trends of the exports earnings of different sub-categories agricultural and processed food products after the economic reforms. The trends in agricultural exports are increasing and it constitutes near about 18% of the total exports. During 1996-97, it was highest and constituting 21% of the total export earnings. After that it declined as compared to the total national exports as a whole. The performance was a phenomenal change in agricultural sector and it declined to 14% during that period. This is a matter enquiry of how it tends to decline and why? After WTO regime of 1995, in due of the agreement on agriculture (AOA) the Indian exporters raised their hopes that the developing countries trade in agricultural commodities whether it is primarily or processed food products 19

is going to be less restricted. They will have access to other leading market, which leads to greater international trade. The overall merchandise trade as well as agriculture with allied products and processed food products trade ironically declined with sharp slow down in the world economy. This is because the developed countries had dominated agricultural trade. Brazil was the only one exception among developing countries which was coming under the top 10 leading exporters of agricultural commodities. Six E.U. members were in the top ten and the top importers of the agricultural commodities among the developed countries. The agricultural export and processed food product shares to total national exports share has been declined since 1996-97 as the Syto & Phyto Sanitary (SPS) measure became too stringent. The resulting contraction in agriculture and allied sectors and processed food exports would have a negative impact on such commodities for production and processing. However, WTO recognized this and it explained the need for consumers to compensate the producers who would be adversely affected. Moreover, it again pointed out that the removal or relaxation of overly stringent SPS regulations can generate welfare gains to the consumers. However, from the report of the United States Department of Food and Agriculture (USDFA) the majorities of the producers are falling under the developing country category and so they may not be able to effectively access their developed countries markets as the restrictions are very severe in the developed countries. Table -5.1: Exports and Imports of Agriculture Commodities vis--vis Total National Exports and Imports. (1990-91 to 2001-02). (Rs Crores)
Year Agriculture Imports Total National Imports Imports to National Imports (%) 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1205.86 1478.27 2876.25 2327.33 5937.21 5890.10 6612.60 8784.19 43170.82 47850.84 63374.52 73101.01 89970.70 122678.14 138919.88 154176.29 2.79 3.09 4.54 3.18 6.60 4.80 4.76 5.70 6012.76 7838.13 9040.30 12586.55 13222.76 20397.74 24161.29 24843.45 32527.28 44041.81 53688.26 69748.85 82673.40 106353.35 118817.32 130100.64 Agriculture Exports Total National Exports Agriculture Exports National Exports (%) 18.49 17.80 16.84 18.05 15.99 19.18 20.33 19.10 to

20

1998-99 14566.48 178331.69 1999-00 16066.73 215528.53 2000-01 12030.36 226773.47 2001-02* 9311.55 141989.68 Source: www.indianfoodindustry.net

8.17 7.45 5.31 6.56

25510.64 25313.66 28909.30 16254.29

139751.77 159095.20 202509.76 115762.05

18.25 15.91 14.28 14.04

Table-5.2: Share of Food Exports in Total Agricultural Exports Value (Rs in crores)
Year Agriculture Exports 1993-94 12586.55 1994-95 13222.76 1995-96 20397.74 1996-97 24161.29 1997-98 24843.45 1998-99 25510.64 1999-00 25313.66 2000-01 28909.30 2001-02* 16254.29 Source: www.apeda.com Total Food Exports (excluding products) 2849.20 2969.81 7915.12 7722.77 7270.71 9681.65 7365.36 9212.88 10169.43 marine Food Exports To

Agricultural (%) 22.636 22.459 38.803 31.963 29.266 37.951 29.096 31.868 62.564

Exports

After 1995, the USA was the only country which was imposing major SPS measure of notifications and accounted to 526 submitted notifications. Mexico 175 was the most proactive trading countries as far as the SPS measures were concerned. There were near about 2630 notifications during the period of 1995 to the end of the year 2001. The data obtained give the following information as: Table-5.3: Year Wise SPS Notifications Circulated.
Year 1995 1996 1997 1998 1999 2000 2001 Total Number circulated 197 244 293 332 433 360 770 2690 of notifications

Source: WTO information (document G/SPS/N*)

Form the above report and information it is estimated that the OECD countries are overwhelming two out of every three notifications. These notifications have been submitted in conformity with transparency clause (article 7) of the SPS agreement which indicates the

21

legislative complexities of the SPS policies in the countries. From the above SPS regimes, the developed countries imposed the measure to protect their human as well as plants and animals health and in practical terms it was beyond the international standards. From the current scenario there are some buoyant and export commodities groups for India namely coffee, spices, fresh fruits, vegetables and pulses now have to reckon more stringent certification and labeling under different provisions which has been notified by the developed countries. 5.3 Model Estimation: In this section results for the second objective; relationship between the share of processed food exports to USA and UK and the REER, GDP and the relative share of FDI from USA and UK to the food processing industry of India are discussed. To establish this relationship the following model was developed: Model: X ij = X (GDPj, REERij, FDIji) .. (1) In the expansion form the above equation can be written as: Xijt = i + 1GDPjt + 2 REERijt + 3FDI jit + w ijt.. (2) We report the results of Random Effects model rather than Fixed Effects model for the following reason: The sign of the coefficients in the Fixed Effects model are same as in the Random Effects model, but the coefficients are statistically insignificant. This is because the Fixed Effects estimators use only the within information in the panel data and in our case the within variation in our data is extremely limited. Therefore, we use the Random Effects model which gives optimal weightage to the within and between variation in the data. However, the Fixed Effects results are reported in the Appendix, table-3. 5.3. a. Empirical Results of Random Effect Models: The results of random effects model are given below: Table-5.4 Results of Random Effects Model: Dependent variable: Relative Share of Processed Food Exports to the USA and UK (Xijt) Random-effects GLS regression Group variable (i): country R-sq: within = 0.5197 Between = 1.0000 Number of obs 14 avg = 14.0 = 28 2 Number of groups = Obs per group: min =

22

Overall = 0.7332 variables lgdp reer fdi cons Coefficient .019362 -.0003623 8.363073 -.1282935 Std. Err .004345 .0001815 1.874913 .0531195 z 4.46 -2.00 4.46 -2.42

max = Prob > chi2 = P>z 0.000 0.046 0.000 0.016

14 0.0000 [95% Conf. .010846 -.000718 4.688312-. 2324058 Interval] .0278781 -6.69e-06 12.03783 -.0241813

From the results the REER is negative and statistically significant at 5% level. However the sign of the coefficient of REER is negative, where as from economic theory we know as REER increases then exports should also increase. In this case our dependent variable is relative share of processed foods export to USA and UK (that is processed foods export to USA and UK/ total processed foods export*100), as REER increase we think that total export of the food processing industry increases by more than proportionately than the export going to the USA and UK market. So the denominator of our dependent variable increases more than the numerator and thus it is decreasing as REER increases. This is our explanation for the negative sign of the coefficient of REER. The coefficient of real GDP of both USA and UK is positive and significant at 1 percent level. The GDP of importing countries USA and UK will be a positive factor to growth of export of the Indias processed food products in both countries. In other words, it can positively affect the growth rate of Indias processed foods export and competitiveness in the international market. When real income increases the demand for products increases and so the import demand will increase. This hypothesis may not be a similar effect with respect to the backward nations because the low-income countrys real GDP will give different results for import demand of Indias processed food products. The relative share of FDI from USA and UK associated with the variable coefficient is positive and it is highly significant at 1% level. The beta coefficient for FDI is 8.36; this indicates a strong relationship between export and the source country inflow of FDI to the food processing industry of India. Thus, we conclude that FDI coming through joint affiliation can lead to positive trends of export and increase competitiveness of Indias processed food products in both UK and USA market.

23

Section- 6 6.1 Conclusion: The research conducted on FDI and Export Competitiveness: Food Processing Industry of India overviewed the evolution of Indias government policy towards FDI inflows in general and its impact on the competitiveness of the food processing industries since 1990s. It was observed that the Indian government policy towards FDI has been changing over time in tune with the changing developmental needs during the different phases of development. The changing policy framework is affecting the trends and pattern of FDI inflows in India. The study has observed some features regarding the export competitiveness of food processing industry of India: (1) Certain processed food products demonstrate specific experiences where the stringent food regulations crafted by developed countries work as trade barriers for processed food exports of India. The study concentrates on the measurement of the competitive performance of Indias processed food export to the markets of USA and the UK. By applying the panel data analysis of fixed effects and random effects with OLS for fixed effects model and GLS method for random effects model, the study explores the competitiveness of Indias processed foods in the USA and UK market. From the empirical study, it is observed that the relative share of FDI inflows from source countries to host country industry has a positive and significant effect for export competitiveness of the products. The real GDP coefficient is positive and significant in the random effects results, GDP of USA and UK being a positive factor for growth and expansion of the volume of trade of Indias processed foods product in the USA and UK market. The Real Effective Exchange Rate (REER) is negative and statistically significant at 5% level. From results we know that as REER increases then the relative share of processed foods export in USA and UK market is going to be declined. (2) How the food safety standards and regulations applied by the industrialized countries affect Indias export of processed foods to these markets (i.e. the relationship between Indias exports to the USA and UK and the prevailing food safety standards in these countries. (3) The SPS regulations can affect our export trends adversely because of the technical, institutional and policy constraints faced by the Indian firms in order to fulfill the SPS requirements. 24

6.2 Recommendations: Indian food product firms are facing lot of difficulties at the time of producing and packaging and exporting in the current period. How the firms productivity and efficiency be increased so that it can meet the increasing domestic demands as well as can improve its competitiveness in the international market, following recommendations are suggested and discussed below: 1) Improvement of the existing domestic institutional set up of food regulations by avoiding multiplicity of food laws and regulatory bodies and at the same time developing competence in defining and enforcement of discipline on national regulatory laws through the capacity building. The Indian food regulations comprise of various food laws, which have been enacted at different points of time and multiple enforcement of the standard setting agencies are pervading different food sectors that creates confusion in the minds of manufacturers, traders and consumers. Hence, in India it needs a strong unified food independent body like that of Food Development Agency (FDA) in the US to govern legislations laws. Therefore, the new food laws should not only ensure consumer safety by setting up standards based on science and technology but also create an enabling environment for producers value addition in primarily agricultural production and rapid development of food processing industries. 2) Enhancing the efficiency of global food regulatory system through negotiations in international initiatives like in Doha Ministerial Meeting, it is the major challenging step for Indian food processing industries to upgrade/ harmonize our standards with the international food quality being safe and hygienic. Therefore, for this it would require international standard of testing and necessary infrastructure for inspection. 3) Financial and technical support should be governed by government of India to enhance the productivity and efficiency in the food processing industries. The investment by any public and private sector should be encouraged so that it can increase the competitiveness of the products by reducing the cost apart from the stringent SPS regulations. 4) The indigenous food products that have been produced inside home should be commercialized and it is necessary to bring awareness about these products in international as well as domestic market. The ministry of food processing should take some steps to increase these types of products and encourage farmers by giving financial support through the Regional Rural Banks of India, or any other feasible sources. 5) Emphasis should be given to the joint affiliation in food processing industries. The study has discussed the impact of foreign direct investment in the food processing industries which is 25

positive and highly significant. The financial and technical collaboration can lead to better profitability and give better qualitative product with cheaper price and it can compete in the global market. Therefore, government should take some steps to initiate joint affiliation. Large amount of foreign inflows might go up to the food-processing sector if suitable tax incentive policy is followed. I simply believe that if such measures taken by the government then food processing sector would develop to the extent that in a very short span of time government would be in a position to liberalize it to 100%.

References:
Albuquerque, R.: The Composition Of International Capital Flows: Risk Sharing Through Foreign Direct Investment. Journal of International Economics, 61, Pp 353-383, 2003. Alguacil, M.T., Orts, V.: Inward Foreign Direct Investment and Imports in Spain. International Economic Journal, Vol. 17, No 3, 2003. Athukorala, P. C., Jayasuria, S.: Working Paper of Division of Economics Research School of Pacific and Asian Studies. Australian National University, 2005. Baisya, R. K.: Changing Face of Processed Food Industry in India Recent Acquisitions in Indian Food Industry. Processed Food Industry, February 2004. Baisya, R. K.: Opportunities for MNCs In Indian Processed Food Sector. Processed Food Industry, 2004. Banga, R.: The Differential Impact of Japanese and U.S. Foreign Direct Investment on Exports of Indian Manufacturing. Working Paper No.106, ICRIER, 2003. Bernard, H.: Strengthening the Global Trade Architecture for Development- The Post Doha Agenda. World Trade Review, 1(1), Pp 23-45 2002. Bevan, A., Estrin, S., Meyer K.: Foreign Investment Location and Institutional Development in Transition Economies. International Business Review, 139, Pp 43-64, 2004 Www.Elsevier.Com/Locate/Ibusrev Bredahl, M., Abbott, E. C.P., Reed, R.M.: Competitiveness in International Food Markets. Boulder, Col. West View Press Eds, 1994. Concerns, H., Bernard, A.M., Philip, E.: Development and the WTO- A Handbook, Washington DC. World Bank, Pp 428-39, 2002. Correa, C. and Kumar N.: Protecting Foreign Investment Application of a WTO Regime and Policy Options. Academic Foundation, New Delhi, 2003.

26

Douglash, H., Brooks, E., Xiaoqin, F. and Sumulong L. R.: Foreign Direct Investment Trends, Trims and WTO Negotiations. Asian Development Review, 2003. Duk, A. K., Sakthivel, S.: A Study on Foreign Investment in India since 1990s. International Area Review, Vol. 7, Nov. 2004. Dunning John H.: Globalization and FDI in Asian developing countries. edited by Servaas storm and C. W.M. Naastepad, Edward Elgar publishers, 2003. Eckhard, J.: Attracting FDI in A Politically Risky World. International Economic Review, Vol. 43, No.4, 2002. Fan, E. X.: - Technological Spillovers from Foreign Direct Investment A Survey. Asian Development Review, Vol. 20, No1, Pp.34-56, 2002. Gehlhar, M., Regmi, A.: Factors Shaping Global Food Markets New Directions In Global Food Markets/AIB-794, Economics Research Service/USDA, 2004. Gulati, A.: Agriculture and the New Trade Agenda in the WTO 2000 Negotiations- Interests and Options for India. The Institute of Economic Growth working paper, 1999. Gupta, D.: Codex Alimentarious Commission and SPS Agreement. Delhi Ministry of Health, 1999. Hafiz, M., Axele, G.: Regional Integration and Benefits from Foreign Direct Investment in ASEAN Economies: The Case of Vietnam. Asian Development Review, Volume 21, No 1, Pp 66-98, 2003. Hooker, N. H., Julie, A. C.: A Framework for Evaluating Non Tariff Barriers to Trade Related To Sanitary and Phytosanitary Regulation. Journal of Agricultural Economics, 50(1), 1999. Inge, I., Johnsson, T.: Local Technological Competence and Asset Seeking FDI- An Empirical Study Of Manufacturing and Wholesale Affiliates In Sweden. International Business Review, 12, Pp- 369-386, 2003. Inge, I., Jonsson, T.: Local Technological Competence And Asset Seeking FDI- An Empirical Study Of Manufacturing And Wholesale Affiliates In Sweden. International Business Review, 12, Pp-369-386, 2003. Islam, N.: Horticultural and Exports of Developing Countries. Research Report 80. Washington DC: International Food Policy Research Institute, 1990. Kalia, M.: WTO A Bane or Boom for India. Processed Food Industry, 2003.

27

Khalid, N.: The Cutting Edge Collective Efficiency and International Competitiveness in Pakistan. International Development Centre, Oxford Development Studies, Vol. 27, No.1, 1999. Kumar, N.: Liberalization Foreign Direct Investment Flows and Economic Development- The Indian Experience in the 1990s. RIS Discussion Papers; 65, 2003. Kumar, T. K.: Economic Growth Productivity Gains and Foreign Capital- A Comment. EconometricInstitute, Bangalore-78,2004. Www.Geocities.Com/Econometrics_Instiutte> Mehta, R., George, J.: Processed Food Exports From India An Exploration With SPS Regime. Joint Research Project Of Australian National University, University Of Melbourne, Research And Information System India And Thammsat University Thailand,2006. Mehta, R., Nambiar, R.G., Arociasamy, R.: Food Safety Standards and Indian Food Exports. Working Paper of RIS for Developing Countries, 2005. Nagraj, R.: Foreign Direct Investment in India in the 1990s Trends and Issues. Economic and Political Weekly, 2003. Nidhipragha, B., Chutisirwong. P.: Food Safety Standards and Thailands Processed Food Exports. Working Paper of Thammsat University, Bangkok, 2005. Pauwelyn, F: The WTO Agreement On Sanitary and Phytosanitary Measures As Applied In The First Three SPS Disputes. Journal on International Law, 2(4), Pp 641-664, 1999. Raut, L. K. The Effect of Competitiveness and Productivity Growth on Exports of Indian Private Firms. The Indian Economic Journal, Vol.50 Nos. 3&4, 2002-03. Razin, A., Sadka, E. and Yuen C.W.: Social Benefits and Losses from FDI-TWO Nontraditional Views. Regional And Global Capital Flows Macroeconomic Causes and Consequences, Edited by Takatoshilto and Anne O Kruger, University Of Chicago Press, 2001. Ricupero, R.: Transnational Corporations and Export Competitiveness An Overview. World Investment Report Secretary General, UNCTAD, Geneva. Foreign Trade Review, 2002. Srinivasan, T.N.: Developing Countries and the Multilateral Trading System from GATT to the Uruguay Round and the Future. Delhi, Oxford University Press, 1998. Sykes, A. O., Barrett, C.B.: Regulatory Barriers in Integrating World Food Market. Review of Agricultural Economics, 19(1), Pp 91-107, 1997. USFDA U.S. Food and Drug Administration: What Does FDA Do When Violations Are Discovered. 2002. Www.Cfsan.Fda.Gov

28

Verma, S.: Export Competitiveness of Indian Textile and Garment Industry. Working Paper No.94, ICRIER, 2002. Weber, M.: Engaging Globalization- Critical Theory and Global Change. Alternatives, 27 Pp 301-325, 2002. Wondu Holdings Pvt Ltd.: The Effect on Exports and Outbound Foreign Investment. A Report for the Rural Industries Research and Development Corporation, RIRDC Publication No-113, 2003. Bulletin of the Food-Processing Sector in India: APEDA House, www.apeda.com.

Appendix:
Table-1: According to the APEDA data sets the Indian agricultural and agro based processed foods cover six broad areas and each of these six areas consist of subcategories, among them the first three are of the food processing products and other three categories are of agricultural agrobased products, which are given below: The food processing products are: 1. Processed Fruits and Vegetables a) Dried and preserved vegetables b) Mango pulp c) Pickle and chutney d) Other processed fruits and vegetables 2. Animal products a) Buffalo products b) Sheep/goat meat c) Poultry products d) Dairy products e) Animal casing f) Processed meat 3. Other processed foods a) Ground nuts b) Guar gum c) Jaggery and confectionary

29

d) Cocoa products e) Cereal products f) Alcoholic and non-alcoholic beverages g) Miscellaneous preparation h) Milled products The agricultural agro-based products are: 1. Floriculture and Seeds a) Floricultures b) Fresh and vegetables seeds 2. Fruits and Vegetables a) Fresh onions, other fresh vegetables b) Dried nuts (walnuts) c) Fresh mangoes d) Fresh grapes b) Other fresh fruits 3. Cereals a) Non basmati rice b) Basmati rice c) Wheat d) Other cereals Table-2: Share of FDI from UK and USA to the Food Processing Industry of India (Rs Crores)
year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

USA
0.0696 0.1264 0.386 0.7352 2.4756 2.8688 4.006 5.288 4.1432 3.2683 7.3624 14.62 11.276 8.5928

UK
0.0388 0.0516 0.126 0.2344 0.5256 1.072 1.4105 1.7785 86.17 1.293 2.4174 3.6786 2.796 2.805

30

Source: RBI Bulletin Annual Report, 2004.

Table-3: Results of Fixed Effect Models Dependent variable: Relative share of processed food exports to USA and UK, Xijt Fixed-Effects (Within) Regression: Number of obs = 28 Group variable (i): country Number of groups = 2 R-sq: within = 0.6147 Obs per group: min = 14 Between = 1.000 avg = 14.0 Overall = 0.4947 max = 14 Coef. Std. Err. t P>t [95% Conf. Interval] lgdp .3420068 .135372 2.53 0.019 .0619683 .6220452 reer -.0002487 .0001727 -1.44 0.163 -.0006059 .0001085 fdi 3.028941 2.818799 1.07 0.294 -2.802189 8.86007 _cons -3.536327 1.430118 -2.47 0.021 -6.49475 -.5779027 F test that all u_i=0: F (1, 23) = 5.69 Prob > F = 0.0257 Table-4: Results of polled data OLS Regression: Dependent variable: Relative share of processed food exports to USA and UK, Xijt Source | Model | SS .004996463 df 3 24 27 MS .001665488 .000075774 .000252409 t 4.46 4.46 P>t 0.000 0.057 0.000 0.024 Number of obs = Prob > F R-squared Root MSE 28 -------------+-----------------------------Residual | .001818566 Total | expt fdi reer lgdp .00681503 Coef. 8.363073 -.0003623 .019362 F (3, 24) = 21.98 = 0.0000 = 0.7332 = .0087 Interval] 12.2327 .0000122 .0283297 -.0186603

-------------+------------------------------

Adj R-squared = 0.6998

Std. Err. 1.874913 .004345

[95% Conf. 4.493444 -.0007368 .0103944 -.2379267

.0001815 -2.00 .0531195 -2.42

_cons -.1282935

31

Potrebbero piacerti anche