MNEs and Export Spillovers: An Analysis of Indian Manufacturing Industries

Chiara Franco, Subash Sasidharan
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In the present study, we try to provide some empirical evidence for the export spillover effect examining the case of an emerging economy, namely India using firm level data for the period 1994-2006. We disentangle different spillover channels, namely export spillover, R&D spillover and wage spillover. We also consider the heterogeneous technological behaviour of local firms considering how in-house R&D efforts and disembodied technological imports may affect the overall exporting performance. Our findings mainly confirm that the two most important channels for export spillover are mainly the demonstration effect and the R&D spillover effect The decision to export is influenced mainly by technological activities of local firms, confirming that R&D is a key variable that help firms to overcome fixed costs that are crucial to start exporting. Moreover, the findings of the analysis suggest that local firms R&D is highly relevant to internalize the positive spillover effect emanating from MNEs both with regard to decision to export and export propensity.