Foreign Direct Investment and Export Performance in Emerging Economies : Evidence from Indian IT Firms

The effects of FDI on export behavior of both recipients and non-recipient competing firms in the same sector often guides economic development policy. We estimate a Logit model of the probability of export and Pooled Tobit and Fixed and Random Effects Tobit models of the volume of exports using a large sample of Indian Information Technology firms in 2000-2006 that focus on the role of FDI. For FDI recipients the probability of exporting and the volume of exports is greater. In addition, there is clear evidence of a spillover of the effects of FDI to non-recipient firms as their probability of exporting also increase. In a random effects Tobit model spillover also exists for the volume of exports