Premium
Foreign Capital, Spillovers and Export Performance in Emerging Economies: Evidence from I ndian IT Firms
Author(s) -
Kemme David M.,
NikolskoRzhevskyy Alex,
Mukherjee Deepraj
Publication year - 2014
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12111
Subject(s) - foreign direct investment , sunk costs , foreign portfolio investment , portfolio , panel data , monetary economics , economics , foreign capital , international economics , investment (military) , business , return on investment , production (economics) , open ended investment company , macroeconomics , finance , microeconomics , politics , political science , law , econometrics
The role of foreign capital inflow, foreign direct investment ( FDI ) and foreign portfolio investment ( FPI ), on export behavior of both recipients and non‐recipient competing firms in the same sector often guides economic development policy. By using panel data of I ndian IT firms over 2000–2006, we show that FDI reduces the sunk costs of entering foreign markets and therefore positively effects both the decision to export and the export propensity of recipient firms. Foreign portfolio investment has no effect on the decision to export, but it does marginally increase the volume of exports. Further, these positive FDI and FPI recipient effects do not spill‐over to non‐recipients.