Firms in developing countries cite credit constraints as one of their primary obstacles to investment. Direct foreign investment, by bringing in scarce capital, may ease domestic firms' credit constraints. Alternatively, if foreign firms borrow heavily from domestic banks, they may exacerbate...

Recent trade theory emphasizes the role of market-share reallocations across firms ("stealing") in driving productivity growth, while the older literature focused on average productivity improvements ("learning"). The authors use comprehensive, firm-level data from India's organized...

We contribute to the long debated issue of whether inward foreign direct investment (FDI) can stimulate investment in developing countries by introducing a novel measure of FDI, based on industry-level data. Our results suggest a positive impact of FDI on total investment – measured as the...

We quantify foreign direct investment (FDI) spillovers by comparing changes in total factor productivity (TFP) among domestic plants in districts that attracted a large greenfield foreign plant and districts where greenfield FDI was licensed but not yet operational. Treated and untreated...