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The clustering of FDI in India: The importance of peer effects

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  • Nunnenkamp, Peter
  • Mukim, Megha

Abstract

We assess the location choices of 6,020 foreign and non-resident Indian investors at the level of Indian districts. Employing conditional logit models, we find that clustering of FDI is driven strongly by herding among investors from both, the same and other countries of origin. However, the behaviour of non-resident Indians and German investors is strikingly different from the general pattern.

Suggested Citation

  • Nunnenkamp, Peter & Mukim, Megha, 2011. "The clustering of FDI in India: The importance of peer effects," Kiel Working Papers 1697, Kiel Institute for the World Economy.
    • Handle: RePEc:zbw:ifwkwp:1697
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    References listed on IDEAS

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    1. Miss Catriona Purfield, 2006. "Mind the Gap—Is Economic Growth in India Leaving Some States Behind?," IMF Working Papers 2006/103, International Monetary Fund.
    2. Svetlana Ledyaeva, 2009. "Spatial Econometric Analysis of Foreign Direct Investment Determinants in Russian Regions," The World Economy, Wiley Blackwell, vol. 32(4), pages 643-666, April.
    3. Crozet, Matthieu & Mayer, Thierry & Mucchielli, Jean-Louis, 2004. "How do firms agglomerate? A study of FDI in France," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 27-54, January.
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    6. Cheng, Leonard K. & Kwan, Yum K., 2000. "What are the determinants of the location of foreign direct investment? The Chinese experience," Journal of International Economics, Elsevier, vol. 51(2), pages 379-400, August.
    7. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g8o118937 is not listed on IDEAS
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    Cited by:

    1. Frank Bickenbach & Wan-Hsin Liu & Peter Nunnenkamp, 2015. "Regional concentration of FDI in post-reform India: A district-level analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(5), pages 660-695, August.
    2. Gourab Chakraborty, 2018. "Sub-National Location Determinants of Inward Foreign Direct Investment: A Statistical Appraisal Across Regions in India," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(8), pages 1026-1041, August.
    3. T. Juni Zhu & Yago Aranda Larrey & Valerie-Joy Santos, 2015. "What Do Multinational Firms Want from Cities?," World Bank Publications - Reports 23571, The World Bank Group.
    4. Tushar Ranjan Panigrahi & Sunita Mall, 2017. "Relationship Between Fdi Distribution And Regional Economic Aggregates: An Evidence From India," Romanian Economic Business Review, Romanian-American University, vol. 12(4), pages 109-124, december.

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    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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