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Foreign direct investment and industrial agglomeration: Evidence from India

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  • Ramachandran, Renjith
  • Sasidharan, Subash
  • Doytch, Nadia

Abstract

This study analyses the spatial and sectoral distribution of Greenfield Foreign Direct Investment (GFDI) and its impact on industrial agglomeration in India for the time period 2006–2015. We employ a unique dataset obtained by merging GFDI data from FDI Markets and plant level data from Annual Survey of Industries (ASI). We find that the Indian manufacturing sector shows signs of industrial dispersion rather than agglomeration throughout the sample period. Likewise, the spatial distribution pattern of GFDI also shows a decline in regional concentration and, interestingly, GFDI also seems to target new destinations. We also find that the increased spatial spread of GFDI leads to an industrial dispersion in Indian manufacturing industries.

Suggested Citation

  • Ramachandran, Renjith & Sasidharan, Subash & Doytch, Nadia, 2020. "Foreign direct investment and industrial agglomeration: Evidence from India," Economic Systems, Elsevier, vol. 44(4).
    • Handle: RePEc:eee:ecosys:v:44:y:2020:i:4:s0939362520300844
    DOI: 10.1016/j.ecosys.2020.100777
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    Cited by:

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    2. Feng, Ya & Wen, Junqi, 2023. "Foreign direct investment and employee income share: Firm-level evidence," Finance Research Letters, Elsevier, vol. 55(PA).

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    More about this item

    Keywords

    Greenfield FDI; Indian industry; Agglomeration; Indian firms; Concentration;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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