It is possible that a firm would need to be quite large and diversified to achieve these economies, but still not as large and diversified as some of today’s firms have become.
India’s outward FDI peaked from US $ 2.2 billion in 2004–05 to US $ 19.4 billion in 2008–09 before moderating somewhat to US $ 16.5 billion in 2010–11 (Chart 3). This underscores maturing of India’s capital account liberalization process which has encouraged two-way flows. How did this rising trend and shift in composition of capital flows impact the BoP?