Macro/Finance Group, NIPFP

Graduating to Globalisation: A Study of Southern Multinationals

Graduating to Globalisation: A Study of Southern Multinationals, Dilek Demirbas, Ila Patnaik and Ajay Shah. Indian Growth and Development Review, Volume 6, Issue 2, Page 242-259, 2013.

The Helpman-Melitz-Yeaple model is a static framework where firms choose whether to serve foreign customers, and whether to do FDI, based on their productivity. We propose an ordered probit model that unifies the analysis of exports and FDI in the spirit of the Helpman-Melitz-Yeaple model. Our empirical findings, for India, are consistent with the predictions of this model. They also suggest that firm characteristics evolve through time, and that there is a ladder of quality where some firms evolve towards exporting and FDI.