Does the Presence of Foreign Firms Help Technological Upgradation in Indian Firms?

Abstract

Building on the previous work that used citation data to track technology spillovers, this paper proposes three channels of knowledge spillovers among domestic and foreign firms. We argue that most gains in productivity are attributed to the presence of foreign firms through subsidiaries. To track citations, we employ data from firms patenting at the United States Patent and Trademark Office. We trace the knowledge spillovers among the domestic and foreign firms (with or without subsidiaries in India). The results reveal that most citations are made among foreign firms only. However, though fewer, the citations made to foreign firms that have a subsidiary in India contribute to productivity gains of Indian firms. © 2024 Economic and Political Weekly. All rights reserved.