FOREIGN CONTROL AND EXPORT INTENSiTY OF FIRMS IN INDIAN INDUSTRY.

On a priori reasoning, rnultinatior~al corporations (MNCs)- the major source of foreign dlrect investment-intrinsically have certairl monopolistic advan!ages1, which provide them with potentlal comparative aduzntagc to perform better. thao the rival domestic firms of a given developing country in the export of modern manufactures from that cowtry. To put It as a general proposition, foreign control leads to relatively gaaater export-intensity of the firms. This general proposition, wh!ch is deduced from the new economic theories of International trade and Investment, provides a rationale for the "open-door " policy on foreign direct investment in a developing country. Idowever, it can be argued that "the theoretical case is ambiguous and needs eareful empirical investigation for each particular host country " (Lall and Mohammad, 1 983, p.58). Although the lkrature on the subject is rich with empldca / studies at different dc veloplng Pountries, there seems to be no clear consensus on the bettor export performance of foreign Lntrolled firms (MNCs) relative to domestic firms and hence, on the positive contribution ot beign direct investment to solve the whooping balance of payments problems of mast developing eountrles, including India. On the one hand, there are studies, which make out a strong case for Ceign Investment by showing the evidence of foreign controlled firms ' better export performance,;grid on the other, there are studies which underscbre scepticism in the light of the empirical Andings of ei!her superior performance of domestic firms relative to foreign firms or no significan