The Location Choices of Foreign Investors: A District-level Analysis in India
AbstractThis paper analyzes the determinants of the location choices made by foreign investors at the district level in India to gauge the relative importance of economic geography factors, local business conditions, and the presence of previous foreign investors. We employ a discrete-choice model and Poisson regressions to control for the potential violation of the assumption of Independence of Irrelevant Alternatives. Our sample includes about 19,500 foreign investment projects approved in 447 districts from 1991-2005. We find that foreign investors strongly prefer locations where other foreign investors are. They are also attracted to industrially diverse locations and those with better infrastructure. We conclude that the concentration of FDI in a few locations could fuel regional divergence in post-reform India
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1628.
Length: 38 pages
Date of creation: Jun 2010
Date of revision:
FDI; economic geography; location choice; infrastructure;
Other versions of this item:
- Megha Mukim & Peter Nunnenkamp, 2012. "The Location Choices of Foreign Investors: A District-level Analysis in India," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 35(7), pages 886-918, 07.
- 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)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-CWA-2010-06-18 (Central & Western Asia)
- NEP-GEO-2010-06-18 (Economic Geography)
- NEP-IFN-2010-06-18 (International Finance)
- NEP-INT-2010-06-18 (International Trade)
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