Do Export‐Driven ICT Investments Boost Firm Performance? Empirical Insights From Indian Manufacturing

Abstract

The literature on learning‐by‐exporting has largely overlooked the role of information and communication technology (ICT). Given the growing importance of this issue, this study examines whether firms' entry into export markets induces additional ICT investments and how such investments influence performance. Using firm‑level data from India for 2002–2019, the analysis applies a two‑step method: propensity score matching (PSM) to identify export‑driven ICT spending, followed by production function estimation to evaluate its effects. The results show that exporting leads firms to raise their ICT spending, and that this export‑driven component is associated with larger gains in value‐added than the counterfactual ICT spending. Further evidence indicates that export‑driven ICT expenditures support capital formation, and the resulting ICT capital stocks yield higher gains than their counterfactuals. At the sectoral level, less ICT‑intensive industries benefit more from ICT expenditure flows, whereas highly ICT‑intensive industries gain more from ICT capital stocks. Robustness checks based on direct productivity analysis and the PSM difference‑in‑differences approach confirm these findings. Taken together, the evidence highlights the importance of integrated policies that align digital investment strategies with export support initiatives.