DETERMINANTS OF FIRM LOCATION CHOICE IN LARGE CITIES IN INDIA: A BINARY LOGIT MODEL ANALYSIS

Sabyasachi Tripathi and Shamika Kumar

Theoretical and Empirical Researches in Urban Management, 2017, vol. 12, issue 3, 45-62

Abstract: The present paper tries to investigate the economic determinants of firm location choice in the metropolitan/large cities in India by considering firm those are using FDI (i.e., more than 10 percent of foreign investment) in 2012-13. For the analysis binary Logit model is used in this paper by condidering firm level data from Capital Line database, Prowess database provided by CMIE (Centre for Monitoring Indian Economy) and Ace Equity plus database. The empirical estimations show that total value of output, capital, and exports have a negative effect on firm location choice in the large cities. On the other hand, total value of working capital, operating profits, age of the firm, fixed assets, material cost, and sales of a firm have a positive effect on firm location choice in the large cities in India. However, the effect of percentage of FDI and total value of imports are statistically insignificant on the firm’s location choice. Finally, the paper discusses several policies in terms of location choice of firms in the large cities such as higher level of infrastructure investment, etc. for higher and sustainable industry lead urban development in India

Date: 2017
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