Regional concentration of FDI in post-reform India: A district-level analysis

We analyze the concentration of foreign direct investment (FDI) in India at the district level, based on project-specific location choices since the reform program in the early 1990s. The decomposition property of the Theil index allows us to trace changes over time in the overall concentration of FDI to changes in concentration between and within subgroups of districts. We also differentiate between major types and sources of FDI. We find that FDI concentrated in a persistently decreasing number of districts. Concentration across those districts that received at least one FDI project within a given time interval also increased, but this increase leveled off in the more recent past. These trends hold for essentially all types and sources of FDI, while the average level of concentration varies considerably between these types and sources.