Foreign Capital, Spillovers and Export Performance in Emerging Economies: Evidence from Indian it Firms

12 Pages Posted: 9 Oct 2014

See all articles by David Kemme

David Kemme

University of Memphis - Economics

Alex Nikolsko‐Rzhevskyy

Lehigh University - Business School

Deepraj Mukherjee

Kent State University; Kent State University

Date Written: November 2014

Abstract

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 Indian 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.

Suggested Citation

Kemme, David M. and Nikolsko-Rzhevskyy, Alex and Mukherjee, Deepraj, Foreign Capital, Spillovers and Export Performance in Emerging Economies: Evidence from Indian it Firms (November 2014). Review of Development Economics, Vol. 18, Issue 4, pp. 681-692, 2014, Available at SSRN: https://ssrn.com/abstract=2507549 or http://dx.doi.org/10.1111/rode.12111

David M. Kemme (Contact Author)

University of Memphis - Economics ( email )

Memphis, TN 38152
United States
(901)678-5408 (Phone)
(901)678-2685 (Fax)

Alex Nikolsko-Rzhevskyy

Lehigh University - Business School ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

HOME PAGE: http://www.nikolsko-rzhevskyy.com

Deepraj Mukherjee

Kent State University ( email )

PO Box 5190
Kent, OH 44242
United States
9012835245 (Phone)

HOME PAGE: http://www.deeprajmukherjee.com

Kent State University ( email )

Kent, OH 44242
United States

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