Abstract: 

 Multinational firms account for a large share of global trade and production and have significant impact on productivity growth across countries. We develop a tractable model of international trade and multinational production (MP) to analyze their effects on productivity growth through knowledge diffusion across countries.

  We connect the theory to evidence by examining the impact of a 2004 - 2006 Chinese liberalization of outward investment on the productivity growth of its counterparts.  Using an instrumental variable approach, we find a 1 percentage point increase in MP share from China resulted in a 1.83% increase in productivity. Mapping the reduced-form estimates to the rate of idea diffusion from foreign firms, we provide evidence on key parameters used in knowledge diffusion models. 

  While long run productivity growth is primarily driven by domestic firms, MP can have a sizable impact on productivity growth, particularly when productivity differences between multinational and domestic firms are large. Increases in bilateral trade costs shift firm activity away from exporting to producing abroad, leading to productivity increases in the multinational's production destination at the expense of the exporting nation. We quantify the impacts of Chinese liberalization of trade, as well as inward and outward MP, on the productivity growth of 59 countries.

Abstract: 

The paper develops an open economy model to analyze growth and structural transformation in India from 1995 to 2018. I document the impact of foreign demand for Indian service exports on the productivity growth and novel patterns of structural transformation. By disaggregating the service sector according to its use intensity as an intermediate input, the paper assess the growth impacts of tradable services within the global value chain. The results reveal that India's producer services experienced substantial productivity gains relative to the global average. Additionally, estimates indicate that producer services experienced the steepest decline in trade costs over the studied period. Under the open economy setting with services being tradable, the paper more accurately captures employment share patterns in the services sector relative to the closed economy model. I decompose India's productivity growth and show foreign demand has driven increases in allocative efficiency by driving production towards sectors with higher productivity.

Abstract: 

India received approximately 65 billion US dollars in net inflow foreign direct investment (FDI) in 2020, according to the International Monetary Fund's Balance of Payments database. As a fast growing country with international comparative advantages in the service sector, which is a sector that women have comparative advantage in, we aim to understand whether the rise in FDI will induce the closing of the gap between female and male market labor participation through this project. This paper investigates a critical question of whether inter-regional variations in FDI influence time allocation decisions for both men and women. We build a model of FDI and analyze its effect on female labor participation and wage inequality. Using the National Sample Survey and two time use survey of India between 1998 and 2019 for six states with comparable data, we treat unpaid work on farm or livestock in the data as agriculture production and household services as service production. FDI is directed to all sectors in varying degrees in each market sector. We analyze the differences of female labor participation and wages between regions induced by heterogeneous FDI inflows.