Abstract
The chapter examines the impact of Bilateral Investment Treaties (BITs) on certain performance indicators of manufacturing firms in India, focusing on the impact of foreign direct investment (FDI) and how that impact is influenced by BITs. The impact of BITs on FDI quality is looked at from four vantage points – firm-level export intensity, wage share in sales (to capture the employment generation impact), local materials usage and technology orientation. These four firm performance indicators are often deemed in literature to be where ‘good’ FDI has the most positive impact. Using panel data models, this chapter looks at the changes in these indicators over time for manufacturing firms in India, and more importantly tries to investigate the role of foreign ownership and BITs signing on these four FDI quality metrics.
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