Outward FDI and ITS Impact on the Parent Firm: A Case of Indian GVC Firms

The present study examines the link between OFDI, GVC participation and the impact on domestic technological investments and value-added output. The results point out that GVC participation has a positive impact on the parent firms’ OFDI intensity. Further, the study examined the impact of overseas investments by GVC firms on their domestic technological investments and value-added. The study used the RBI’s firm-level overseas direct investment data in combination with the financial data sourced from the Prowess database for the period 2008–2020. The impact of overseas investment activity on the parent firm is analysed by employing the PSM-DID technique. Results point out that GVC firms that undertook investment abroad witnessed a positive impact on the domestic technological investment and value-added. Furthermore, the sub-sample study examined the impact based on the location and the mode of investment. The analysis calls for policies to encourage Indian firms to venture abroad as it may allow them to access technological and strategic assets and help them in their efforts to move up the value chain.