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Graduating to Globalisation : A Study of Southern Multinationals

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  • Dilek Demirbas

    (National Institute of Public Finance and Policy)

  • Ila Patnaik
  • Ajay Shah

Abstract

FDI by firms in developing countries is a recent phenomenon and demands a study of relationship between firm productivity and different modes of globalisation activities. This paper attempts to understand this relationship through ordered probit models, examining two key hypotheses using firm level panel data from India. First, we test whether there are characteristic differences between domestic firms, exporting firms and firms engaging with FDI. Second, we test if FDI is an integral part of the evolution of firms in developing countries. Our results suggest that there are strong differences between domestic firms, exporting firms, and firms that invest abroad, especially in their knowledge investment, indicating the presence of a ladder of quality in graduating to globalisation.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 21854.

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Date of creation: Jan 2010
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Handle: RePEc:eab:financ:21854

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Keywords: Outbound FDI; panel data; India; Ordered Probit models;

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Cited by:
  1. Patnaik, Ila & Shah, Ajay, 2010. "Why India choked when Lehman broke," Working Papers, National Institute of Public Finance and Policy 10/63, National Institute of Public Finance and Policy.
  2. Rudrani Bhattacharya & Ila Patnaik & Ajay Shah, 2012. "Export Versus FDI in Services," The World Economy, Wiley Blackwell, vol. 35(1), pages 61-78, 01.

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