Exports Spillovers from Multinational Enterprises to Domestic Firms in India: A Study of Selected Services

The article investigates horizontal export spillovers from multinational enterprises (MNEs) to domestic firms in India’s services sector. Using firm-level data from 2010 to 2020, the focus is on three industries: telecommunications, computer services and other business services. Spillovers through ‘information’ and ‘competition’ channels have been assessed by employing Heckman’s selection models. Two variables, namely the overall foreign presence and the export presence of MNEs, have been constructed to account for the aforementioned channels of spillovers. The overall foreign presence is found to have a positive impact on the export intensity of domestic firms. However, the export presence of MNEs adversely affects their export intensity. Moreover, the effect of spillovers on domestic firms’ decision to export is limited. Firm-specific and industry-specific variables like the size of domestic exports, industry concentration and relative wages emerge as important determinants of export intensity. JEL Codes: F14, F23, L84, L86