Inward FDI, outward FDI, and firm-level performance in India

Koray Aktas and Valeria Gattai

No 481, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: In recent years, India has emerged as a leading foreign direct investment (FDI) player, featuring prominently as both an origin and a destination of FDI. This study takes a firm-level perspective to empirically address the relationship between inward FDI, outward FDI, and firm-level performance in India. Using the Orbis database, our estimates reveal that Indian firms that have at least one foreign shareholder and/or one foreign subsidiary outperform those that do not. Controlling for endogeneity through propensity score matching and difference-in-difference techniques, we show that the deeper the FDI involvement, the larger the performance differentials. Moreover, compared with investing abroad, receiving foreign capital can contribute more toward enhancing the performance of Indian firms.

Keywords: India; Foreign Direct Investment (FDI); inward; outward; firm-level performance (search for similar items in EconPapers)
JEL-codes: F23 L25 O53 (search for similar items in EconPapers)
Pages: 47
Date: 2021-09, Revised 2021-09
New Economics Papers: this item is included in nep-bec, nep-cwa, nep-eff, nep-fdg, nep-int and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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