The location choices of foreign investors: A districtlevel analysis in India

Megha Mukim and Peter Nunnenkamp

No 1628, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This 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.

Keywords: FDI; economic geography; location choice; infrastructure (search for similar items in EconPapers)
JEL-codes: F23 R12 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The Location Choices of Foreign Investors: A District-level Analysis in India (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1628

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