| ID | 117802 |
| Title Proper | All foreign direct investment is local |
| Other Title Information | Indian provincial politics and the attraction of FDI |
| Language | ENG |
| Author | Coan, Travis G ; Kugler, Tadeusz |
| Publication | 2012. |
| Summary / Abstract (Note) | This study focuses on the differences between Indian states in terms of banking infrastructure, size of the economic market and most importantly provincial-level political capacity that creates the pull of foreign direct investment (FDI). While the majority of the extant empirical literature examines national-level data, few studies analyze international capital formation at the provincial level and the dynamics of sub-national political capacity-that is, where allocations are made and policies are implemented. This study corrects for this deficiency. Using data at the provincial level in India over the period 2000-2005, we find an inverted-U-shaped relationship between provincial capacity and FDI, suggesting the presence of a critical point at which additional extractive capabilities have negative implications for foreign capital accumulation. The results suggest a number of important policy implications, allowing researchers to identify specific regions in which capacity is likely to facilitate investment, while also providing a political-economic model to better-forecast changes in investment at the sub-national level in India. |
| `In' analytical Note | South Asia Economic Journal Vol. 13, No.1; Mar 2012: p.27-50 |
| Journal Source | South Asia Economic Journal Vol. 13, No.1; Mar 2012: p.27-50 |
| Key Words | FDI ; India ; Gross Domestic Product |