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• I examine the distributional dynamics of establishment total factor productivity growth within India's manufacturing sector from 2001–2015. • I estimate separate rates of conditional convergence to the foreign and domestically owned components of the within industry productivity frontier. • I find positive overall convergence, but convergence to the foreign owned component of the within industry frontier is substantially dampened. • These findings imply significant differences in the nature of technology transfer from highly productive domestic and foreign firms. Inward foreign direct investment (FDI) has the potential to be an important conduit for technology transfer to developing countries. However, a large body of empirical research has found that the realized benefit to domestic productivity is minimal. This apparent absence of productivity spillovers from FDI is particularly surprising in light of recent evidence that firms in developing countries exhibit positive productivity convergence, or catch-up, to their industry's productivity frontier. In this paper, I use establishment level panel data from 21 distinct industries within India's manufacturing sector from 2001–2015 to provide new evidence on this issue. I analyze establishment total factor productivity conditional convergence and examine if the presence of foreign owned establishments within each industry's productivity frontier impacts this relationship. While I find statistically and quantitatively significant conditional convergence to the overall frontier, I show that convergence to the foreign owned component of the frontier is markedly slower. I corroborate this finding by exploring the impact of foreign ownership in the frontier on the dynamics of the within industry productivity distribution. This robust result suggests differences in the nature of technology transfer from highly productive domestic and foreign firms. I argue that my general econometric approach helps to reconcile the previously disconnected findings of negligible spillovers from FDI in developing countries with evidence of positive productivity convergence and the substantial presence of foreign firms in the productivity frontier. [ABSTRACT FROM AUTHOR]

Externalities occur among agglomerated firms. Scale externalities occur between firms in the same industry. Scope externalities occur when heterogeneous industries are collocated. Combined scale-and-scope externalities exist when the scale of one industry is beneficial to the growth of another collocated industry. In the Sein and Haridranath (2004) framework of information technology (IT) impacts on development, scale externalities correspond to second-order impacts, while combined scale and scope eternalities correspond to third-order impacts. We use an agglomeration perspective to explain the growth of IT industries in India. We study growth patterns of four specific IT industries: computer and peripheral equipment manufacturing, semiconductor and other electronic components manufacturing, software, and IT-enabled services. Our analysis of the IT agglomerations of Bangalore and Hyderabad in India suggests the existence of scale, scope and combined scale-and-scope externalities played an important role in IT industry growth. We also show that the growth of IT industries has second- and third-order impacts on national development. © 2008 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]