Spillovers from FDI and Decision to Export by the Domestic Firms: The case of select Indian industries

Objectives of this paper are to empirically examine the roles of three channels of FDI liked spillovers in enabling domestic firms (DFs) to take decision to export (DTE). The findings suggest that competition has a positive effect on DTE but there is no evidence of technological and export related information externalities affecting DTE of DFs. When heterogeneity in inefficiencies of DFs is introduced in the estimation equations, the study reveals that the export spillovers created through the information externalities benefits the efficient DFs. Although export spillovers created through competition effects benefits all DFs in taking DTE, it benefits more the efficient DFs. The implication of this result for the Government is that it should actively promoting FDI in the industries selected for this study for transforming non-exporting DFs into exporting DFs. [FGKS Research Paper].