Regional Concentration of FDI in Post-reform India: A District-level Analysis

We analyze the concentration of 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 the extensive margin of concentration persistently increased, with an ever larger number of districts not attracting any projects. The intensive margin increased as well but the 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.