Determinants of Foreign Direct Investment in India

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T O K YO U N IV E R S IT Y O F F O R E IG N S T U D IE S

Determinants of Foreign

Direct Investment in

India

Region-Sector-Wise Analysis

Yu k i T su ch i ya ( 82 1 11 5 6 ) Fe b r u a r y 1 2 , 2 0 15 A bs t r a ct : W h i l e t h e r e a r e a n um b e r o f e m p i ri c a l s t u di e s on t h e i m p a c t a n d t h e d et e r m i n a nt s o f F o r e i gn Di r e c t In v e s t m e nt ( F D I) , f e w o f t h e r e s e a r c h h av e b e e n i m p l em e n t ed i n t e r m s o f In di a at t h e r e gi o n l e v el . In t hi s p ap e r , t h e d et e r m i n a nt s o f F D I t o w a r ds Ind i a (d a t a f ro m t h e p e ri o d 2 00 8 -20 1 3 ) w o ul d b e ex a m i n ed r e gi o n - wi s e , us i n g s t a t e - wi s e d a t a . S e ct o r - w i s e G DP wo u l d b e u s e d a s a v a ri a b l e i n o r d e r t o an a l yz e w h i ch m a rk e t b e i n g t h e si gn i fi c a n t d e t e r m i n an t . It r e v e a l s t h a t ge n e r a l l y F D I i n Ind i a i s r e l at e d p o s i t i v el y w i t h G DP p e r c a p i t a , l e n gt h o f s t at e a n d n a t i on a l hi gh w a ys , G DP o f s e r vi c e s e ct o r , n um b e r o f t el e p ho n e s p e r 10 0 po p ul a t i o ns , an d am ou n t o f n a t u r al ga s p ro d u c e d. Es p e c i al l y t h e r e s ul t s r e v e al e d t h a t t h e F D I i n fl o w s h a v e a si g ni f i c a nt r el a t i o n w i t h t h e m a r k e t si z e o f t h e s e r vi c e s e c t o r o f t h e i ni t i a l ye a r .

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F o r A ck n o wl e d ge m e nt . . . .. . ... . ... . ... . ... . ... . . .. . . . .. . .. . . . .. . .. . . . .. . .. . . .. . .. . . . 3 1 . In t r o du c t i o n . . . .. . ... . ... . ... . ... . ... . . .. . . . .. . .. . . . .. . .. . . . .. . .. . . .. . .. . . . 4 1. 1 . T e rm i no l o g y . ... . ... . ... . ... . ... . . .. . .. . . . .. .. . . . .. . .. . . . .. . .. . . . .. . .. . . . .. . . 5 1. 1 .1 . F o r e i gn Di r e c t In v e s t m e nt ( F D I ) . . . .. . .. . . . .. . .. . . . .. . .. . . . .. . .. 5 1. 1 .2 . G r os s D o m es t i c P r o du c t ( GD P ) .. . . . .. . .. . . . .. . .. . . . .. . .. . . . .. . . 6 1. 2 . Di s c us s i o n o n F D I . . ... . ... . ... . .. . . . .. . .. . . . .. . .. . . .. . .. . . . .. . .. . . . .. . . 6 1. 2 .1 . F D I a s f o r In d i a ... . ... . ... . .. . . . .. . .. . . . .. . .. . . .. . .. . . . .. . .. . . . .. . 8 1. 3 . Di s c us s i o n ab o ut F D I Im p a c t o n E c o no m i c G r o wt h . .. . .. . . . 8 1. 4 . G ov e r n m en t o f In d i a F D I P ol i ci e s . .. . . . .. . .. . . . .. . .. . . . .. . .. . . . .. 1 0 1. 5 . W h y r e gi o n -s e c t o r - wi s e In d i a i s t h e S u bj e c t . .. . . . .. . .. . . . .. . 1 4 1. 6 . Li t e r a t u r e R e v i ew . . ... . ... . ... . .. . . . .. . .. . . . .. . .. . .. . . . .. . .. . . . .. . .. . . 1 9 2 . D at a . . . .. . ... . ... . . . ... . ... . .. . . . .. . .. . . . .. . .. . . .. . .. . . . .. . .. . . . .. 2 4 2. 1 . S a m pl e S t at e s , U ni o n T e r r i t o ri e s , a n d R e gi o ns . . . .. . .. . . . .. . 2 4 2. 2 . D at a D e s c ri p t i on a n d T h e o r y . . .. . . . .. . .. . . . .. . .. . . . .. . .. . . .. . .. . 2 6

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2 3 . M o d e l a n d M e t h o d ... . ... . ... . ... . ... . . .. . .. . . . .. . . .. . .. . . . .. . .. . . . .. . .. . . . .. . 2 9 3. 1 . M o d e l B u i l di n g .. . ... . ... . ... . ... . .. . . . .. . .. . . .. . . . .. . .. . . . .. . .. . . . .. . 2 9 4 . R e s ul t s a n d A n al ys e s .. . ... . ... . ... . ... . .. . . . .. . .. . . .. . . . .. . .. . . . .. . .. . . . .. . 3 2 4. 1 . R e s ul t s a n d A n al ys e s o n Ex pl a n at o r y V a ri a b l es . . .. . . . .. . .. 3 2 4. 2 . R e s ul t s a n d A n al ys e s o n S t a t es , Un i on T e r r i t o ri e s , a n d R e gi o n s 3 5 5 . C o n cl u s i o n . . . .. . ... . ... . ... . ... . ... . . .. . .. . . . .. . .. . . . .. . .. . . . .. . .. . . .. . .. 4 0 6 . R e f e r e n c e s . . . .. . ... . ... . ... . ... . ... . . .. . .. . . . .. . .. . . . .. . .. . . . .. . .. . . .. . .. 4 1

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For Acknowledgement

I w o ul d l i k e t o ex p r e s s m y gr e a t a pp r e c i a t i on t o P r o f e s s o r K i m i k o U n o f o r h e r v al u a bl e a nd co n s t r u c t i v e s u gge s t i on s an d a s s i s t an c e du r i n g t h e w o rk o f t hi s s t u d y. I w o ul d al s o l i k e t o t h a n k a l l t h e m em b e r s i n P r o f e s s o r Un o ’ s s em i n a r f o r gi v i n g c o n s t r u c t i v e f e e d b a c ks t o t h i s st ud y. D i s cu s s i on s t h at w e r e do n e i n t h e s e m i n a r w e r e v e r y i n s i gh t f ul .

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4

1. Introduction

In r e c e n t ye a r s , F o r e i gn Di r e c t In v e s t m e nt ( F D I) h a s b e e n r e ga r d e d a s a n i m po r t a nt f a ct o r f or e c o no m i c d ev e l op m e nt . As f o r In d i a , t h e am o un t o f F D I h a s a n i n c r e a s i n g t r e nd , a nd al s o t h e G ro s s D om e s t i c P r o du c t ( GD P ) i s i n c r e a s i n g e v e r y ye a r . In m os t em pi r i c a l s t u di e s , i t i s c on c l u d e d t h at F D I c o n t ri b ut e s t o b ot h f a ct o r p r o du c t i v i t y a n d i n co m e gr o w t h i n h o s t c ou n t ri e s , b e yo n d w h at do m e st i c i n v e s t m en t w o ul d n o rm a l l y c a u s e ( O EC D , 2 00 2 ) . T h i s i s c o n s i d e r e d t o b e a l s o t h e s a m e a s f o r In d i a ( K un d r a , 2 0 09 ) . W i t h F D I a n d G D P ’s gr o wi n g a m o u nt , t h e i nt e r e s t t o w a r ds In d i a a s a d e s t i n a t i o n o f F D I h a s b e e n gr o wi n g i n J a p an , a nd r e c e nt l y In d i a h as a s s i gn e d k e y a gr e e m e nt s w i t h J a p a n t o s h a r e ‘S p e c i al S t r at e gi c G l o b a l P a r t n e r s hi p ’ ( C h au d hu r y, 2 0 1 4 ) . U nd e r t h e c o ns i d e r a t i on o f p r e vi o us e m pi r i c al s t ud i e s o n t h e r e l at i o n o f F D I a n d G DP , i t c o ul d b e s t a t ed t h a t F D I t r i g ge r s e c on om i c d ev e l op m e nt i n In d i a . A s m e nt i on e d a bo v e, t h e a m o u nt s o f F D I h a v e a n i n c r e a s i n g t e n d en c y. Ho w e v e r , t h e a m ou nt o f F D I w i d e l y v a r i es d ep e n di n g o n e a c h s t at e . If m o r e s t a t es b e a b l e t o c a l l i n a l a r ge r a m o un t o f F D I, t h e e c o no m i c ga p a m o n g st a t e s w ou l d d e c r e a s e . In a dd i t i on , t h e w ho l e n a t i o n w o ul d b e e n a b l ed t o i n c r e a s e i t s GD P . Th e p u rp o s e o f t hi s t h e si s i s t o ex a m i n e t h e d et e r m i n a nt s o f F D I t o w a r ds In d i a . In t h i s p a p e r , F D I w o u l d b e r e ga r d e d a s a p o s i t i v e f a c t o r on e c o no m i c d e v el o pm e nt . B y u s i n g r e g r e ss i o n m o d el a nd r e gi o n - wi s e d at a , t h e d e t e rm i n an t s i s t o b e ob s e r v ed . Fi n a l l y t o a n a l yz e h o w t o p ro m ot e a nd i n c r e a s e t h e am o un t o f F D I t h at w i l l b e n e fi t b o t h t h e ho s t a nd i n v e s t i n g n a t i o n s .

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1.1. Terminology

In o r d e r t o c l a r i f y t h e m a i n t e r m s u s ed i n t hi s p a p e r , s om e o f t h e m os t i m po r t a nt wo r d s w o ul d b e d e fi n e d i n t hi s s e c t i on .

1.1.1. Foreign Direct Investment (FDI)

Th e t e rm “ F D I” i s d e f i n e d i n t h e B a l a n c e o f P a y m e nt s Ma n u al Fi f t h Ed i t i on ( IM F , 1 99 3 ) an d i n D et ai l e d B e n c h ma r k o f F o r ei g n Di r e c t I n v es t m e nt : T hi r d E di t i o n ( O EC D , 1 9 96 ) . A c c o r di n g t o U N C T A D , “ F D I r ef e r s t o an i n v e s t m e nt m ad e t o a cq u i r e l a st i n g i nt e r e s t i n e nt e r pr i s e s op e r at i n g ou t s i d e of t h e e c on o m y o f t h e i n v e s t o r . F ur t h e r , i n ca s e s o f F D I, t h e i n v e s t o r ´ s pu r po s e i s t o g ai n a n e f f e c t i v e v o i c e i n t h e m an a g e m en t o f t h e e nt e r pr i s e . T h e f or e i gn e nt i t y or gr o up o f as s o ci a t ed e nt i t i es t h at m a k e s t h e i n v es t m e nt i s t e r m e d t h e " di r e ct i n v e s t or " . T h e un i n co r po r at e d o r i n co r po r at e d e nt e rp r i s e - a b r an c h o r s u bs i d i a r y , r es p e c t i v e l y , i n w h i c h d i r e c t i n v es t m e nt i s m a d e -i s r e f er r e d t o a s a " di r e c t i n v e s t m e nt e nt e r pr i s e" . S o m e d e gr e e of e q ui t y ow n e r s h i p i s al m os t a l w a y s c o ns i d er e d t o b e a ss o ci a t e d w i t h a n e f f e c t i v e v oi c e i n t h e m an a g e m en t o f a n e nt e r pr i s e ; t h e B P M5 s u gg e s t s a t h r e s h o l d o f 1 0 p e r c e nt of e qu i t y ow n e r s h i p t o qu a l i f y a n i n v e s t o r a s a f or e i gn di r e ct investor.”1 In s h o r t , F D I a r e i nv e s t m e nt s t h at a r e do n e t o d i r e c t l y ga i n i n t e r es t s b y a d m i ni s t r a t i n g f i r m s i n h o st co u nt r i e s , s u c h as M & A an d 1 U NC T A D “ F o r e i gn Di r e c t In v e s t m e nt ” ( 19 9 9 )

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gr e e n f i el d i n v es t m e nt . It d o e s n ot i n c l u d e i nv e s t m e nt s w h i c h a r e d on e vi a s e cu r i t i e s ( s o c a l l e d F o r e i gn P o r t fo l i o In v e s t m e n t ).

1.1.2. Gross Domestic Product (GDP)

Th e t e rm “ G DP ” i s d e fi n e d i n S N A 1 .1 2 8 a n d 2 . 17 3 - 2 .1 7 4 ( O EC D , 2 0 01 ) . A c c o rd i n g t o O EC D , “ G r o s s d om e s t i c pr od u c t i s a n a gg r e ga t e m ea s ur e of pr o du c t i o n e q u al t o t h e s u m o f t h e g r os s va l u es ad d e d o f al l r e s i d e nt i n s t i t ut i on al u ni t s e ng a g e d i n pr o d u ct i o n (p l u s a n y t a x e s , a nd mi n us a n y s u b s i di e s , o n p r o d u c t s n o t i n cl ud e d i n t h e v al u e o f t h ei r o ut p ut s ). T h e s u m of t h e f i n a l u s es o f g o od s a n d s e r vi c e s (a l l u s e s e x c e p t i nt e r m e di at e c on s u mp t i o n ) m e a s u r ed i n pu r c ha s e r s' p ri c e s , l es s t h e va l u e of i m p or t s of go o ds an d s e r v i c e s , or t h e s u m of p r i m ar y i n c o m e s di s t r i bu t e d b y

resident producer units.”2

1.2. Discussion on FDI

F D I t o w a r ds d e v el o pi n g c o un t ri e s h a s b e c om e a n i nt e r n a t i o n al t r e n d . In 20 0 9, F D I b y p r i v a t e e qu i t y f u n ds a nd s ov e r e i gn w e a l t h fu n ds t o ge t h e r a c c o un t e d f o r o v e r 1 0 % o f gl ob a l F D I f l o ws . P E f u nd s a r e al s o m a j o r c o n t ri b ut o r s t o c r o s s - bo r d e r M & A w h i ch w as t h e m a i n f a c t o r o f t h e i n c r e a s e of gl o b al F D I ( s e e T a bl e 1 ). B u t i n t h e r e c e nt ye a r s , a c c o rd i n g t o U NC T A D3, a l t h ou gh t h e gl o b al F D I r o s e b y 1 1 % , t h e d e v e l o pi n g 2 OE C D “ O E C D G l o s s a r y o f S t a t i s t i c a l T e r m s ” ( 20 0 8 ) 3 U NC T A D “ G l o b a l Inv e s t m e nt T r e nd s M on i t o r No . 1 5 ” ( 20 1 4 )

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7 n at i o n s a r e t r a pp e d i n a hi s t o r i c al l y l o w sh a r e ( 3 9 % ) . D e s p i t e t h e i n f o rm a t i o n a b o v e, t h e a m ou n t t o w a r d s d e v el o p e d c o un t ri e s i n c r e a s ed b y 12 % t o US $ 57 6 b i l l i on . F D I t o t h e E u r o p e a n U ni o n i n c r e as e d, w hi l e fl o w s t o t h e U ni t e d S t at e s d e c l i n e d . U N C T A D fo r e c a s t s t h a t t h e gl ob a l F D I f l o w s w i l l r i s e gr a d u a l l y i n 2 0 14 a n d 2 01 5 , t o U S $ 1 .6 t r i l l i on a nd US $ 1. 8 t r i l l i on r e s p e c t i v el y. T a bl e 1 . C r o s s - B o r d e r M & A s b y P r i v at e Eq u i t y F i r m s 20 0 0 - 2 01 0 ( ci t e d f r om “ In d i a `s F D I I n fl o ws T r e nd s an d C on c e p t s ” b y K . S . C h a l ap a t i R a o , B i s w a j i t Dh a r , 2 0 11 )

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1.2.1. FDI as for India

In d i a h a s b e e n di s t i n gu i s h e d a m on g t h e w o rl d a s a F D I d e s t i n at i o n i n r e c e nt ye a r s a s w el l a s i t s r ap i dl y gr o w i n g e c o n om y . A c c o r di n g t o U NC T A D3, i t h as ex p e ri e n c e d a 1 7 % gr o wt h i n F D I i n fl o ws , t o US $2 8 bi l l i o n . A s a m em b e r n a t i o n o f t h e B R IC S , In d i a h a s b e e n co nt i n u i n g t o b e a s t r o n g p e r f o rm e r i n at t r a ct i n g F D I. BR IC S `s c u r r e n t s h a r e o f gl o b al F D I f l o w s a r e 2 2 %, w hi c h i s a s t w i c e o f i t s n um b e r b e f o r e t h e fi n a n ci a l c r i s i s i n 20 0 7 -0 8 . In l a t e 2 0 12 , 6 n at i on s i n cl u di n g In d i a w hi c h a r e AS E A N ’s F T A p a rt n e r s l a un c h e d t h e n e g ot i at i o n o f t h e R e gi on a l C o m p r e h e ns i v e E c o no m i c P a r t n e rs h i p ( R C EP ) . A c c o r di n g t o U N C T A D4, In d i a h a s c on c l u d e d n e go t i a t i o ns wi t h A S E A N o n t r a d e i n s e r vi c e s an d on i n v e s t m en t o n D e c e m b e r 2 0, 20 1 2. In a dd i t i on , an F T A b e t w e e n E U a nd In d i a a r e u n d e r n e go t i a t i o n si n c e 20 07 . Th i s i s ex p e c t e d t o i n cl u d e a s u b s t a nt i v e i n v e s t m e nt p ro t e ct i on c h a pt e r .

1.3. Discussion about FDI Impact on Economic

Growth

Al t ho u gh t h e r e a r e m an y t h e o ri e s a b o ut t h e F D I i m p a c t o n e c on o m i c gr o w t h , m a n y o f t h e m c l ai m t h at F D I h a s a po s i t i v e e f f e c t o n h os t c ou n t ri e s ’ e co n om i c gr o wt h . G e n e r a l l y, F D I i s co n s i d e r e d t o b r i n g v a ri o us b e n e f i t s s u c h a s t e c h n ol o g y d e v e l o pm e n t , i n c r e a s e o f e m p l o ym e n t , a n d ex p an s i o n o f i n t e rn a t i on a l n e t w o rk s an d s o o n. 4 U NC T A D “ IIA Is s u e s N ot e N o . 3 ” (2 0 1 3 )

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9 In t h e r e c e n t ye a r s , t h e po si t i v e e c on o m i c e f f e c t o f F D I i n b ot h ho s t a n d h om e c ou n t ri e s h as c om e t o b e m o r e a nd m o r e a p p r e c i at e d . A c c o rd i n g t o J u n an d B r e w e r5, T h e i nt e r e st i n t h e b r o a d e r ro l e o f F D I i n s u s t a i n ab l e d e v e l o p m en t h a s b e e n i n c r e a s ed . As no t e d b y F e l d s t e i n6, t h e r e a r e s e v e r a l ad v an t a ge s t h a t co u l d b e ga i n e d b y t h e F D I h o s t s t a t e. F i rs t l y, F D I w o u l d e n ab l e t h e t r a n s f e r o f t e c h no l o g y. T hi s t yp e o f b en e f i t w o ul d e s p e ci a l l y w o r k o n t e c h no l o g y t h a t c a n no t b e g a i n e d t h r o u gh fi n a n ci a l i n v es t m e n t s o r t r a d e i n go o d s a n d s e r v i c e s . It w ou l d a l s o p r om o t e c o m p e t i t i o n i n t h e d om e st i c i n pu t m a r k et . S e c o n dl y, t h e r e c i p i e nt s o f F D I c a n ga i n e m p l o ye e t r a i ni n g i n t e rm s o f op e r a t i n g n e w bu s i n e s s e s t h a t w o ul d c o nt r i bu t e t o h um a n c a p i t a l d e v e l o pm e nt . T h i rd l y, t h e p r o f i t s ga i n ed b y F D I c o n t r i b u t e t o c o rp o r a t e t ax r e v e n u e s i n t h e ho s t c o un t r y. It i s c on s i d e r e d t h a t t h e co n t ri bu t i o n o f F D I t o s u s t a i n a b l e d ev e l op m e nt d ep e n d o n c om bi n at i on s o f p ro j e c t f e a t u r es a nd go v e r nm e n t po l i c i e s i n a n y c a s e . In o rd e r t o i m p ro v e t h e co n t ri bu t i o ns , J un a n d B r e w e r7 s t a t e t h at a v a ri e t y o f p u bl i c s e c t o r i n s t i t ut i o n s a s w e l l as c o rp o r a t i o ns c ou l d d e v el o p p ol i ci e s t h at wi l l i n c r e a s e t h e c o nt r i b u t i on . 5 K w an g W . J u n , T h o m as L. B r e w e r a n d t h e W o r l d B a n k “ Th e R ol e o f F o r e i gn C a pi t al F l o w s i n S u st a i n a b l e D e v el o pm e nt ” ( 1 99 7 ) 6 M a r t i n F e l d s t e i n “ A s p e c t s o f G l ob a l E c on o m i c In t e gr a t i on : O ut l o o k fo r t h e F ut u r e ” ( 20 0 0 ) 7 K w an g W . J u n , T h o m as L. B r e w e r a n d t h e W o r l d B a n k “ Th e R ol e o f F o r e i gn C a pi t al F l o w s i n S u st a i n a b l e D e v el o pm e nt ” ( 1 99 7 )

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10 Th i s a l s o i n c l u d e s h os t go v e r n m e nt p o l i c i es . Ho w e v e r , t h e h os t go v e r nm e n t m u s t b e m i n d f ul o f t h e p ot e nt i al l y h a r m f u l e f f e c t s o f F D I p ro j e c t s . J u n a n d B r e w e r al s o m e nt i o n s a s c i t e d b el o w. “ I m pr o v i n g t h e c on t ri bu t i o ns of f o r e i g n ca p i t al t o s u st a i n a bl e d e v el o p m en t , h ow e v e r , r eq u i r e s m u c h mo r e t h a n s i m pl y i n c r e as i ng t h e a mo u nt s o f f o r ei g n i n v e s t m e n t i n d e v e l o pi n g c o un t ri e s . I t al s o r eq u i r e s h o s t g o v e r n m e n t po l i c i e s t h a t f os t er c o mp e t i t i o n (a n d c o nt r o l r e s t r i ct i v e b us i n e s s pr a c t i c e s ) w i t hi n t h e e c on o m y a n d t ha t al l o w t h e d i v er s e t y p es of i n t er n at i o n al t r an s a c t i on s t h at a r e e s s e n t i al t o t h e s u c c e s s f u l o p er at i on of t y p i ca l F D I pr oj e c t s . S u c h p ol i ci e s w i l l ma x i mi z e t h e p ot e nt i a l l y b en e f i ci al c on t r i bu t i on s o f F D I pr oj e c t s t o s u s t ai n a bl e d e v e l op m e n t . ”7

1.4. Government of India FDI Policies

It c o u l d b e s ai d t h at F D I i n In d i a s t a r t e d wi t h t h e e s t a bl i s h m e nt o f E a s t In d i a C om p a n y i n 1 60 0 . A f t e r t h e S e c on d W o r l d W a r , J a p a n e s e c om p a ni e s s t a rt e d t o i n v es t i n t h e In d i a n m a r k e t . Al t h o u gh Ind i a h a s b e e n n ot i c ed a s a h u ge m a r k et a nd d e s t i n at i o n o f F D I, i t s go v e rn m e nt po l i c y t o w a r ds F D I h as w e nt t h r o u gh m a n y c h a n ge s . T h e p o l i c y a l s o v a ri e s d e p e n di n g o n e a c h s t a t e go v e r nm e nt . A ft e r t h e i n d ep e nd e n c e o f In d i a , t h e a t t e n t i on t o w a rd s b u s i n e ss o f m u l t i n a t i o n al c o rp o r a t i on s ( M NC s ) r o s e, e s p e c i a l l y f o r t h e p o l i c y m a k e rs . In 1 96 5 , a n i n du s t r i a l po l i c y w a s m ad e a l l o wi n g t h e M NC s t o v en t u r e t h ro u gh t e ch ni c a l c ol l a bo r a t i o n. T h e r e f o r e, t h e go v e r nm e n t o f In di a a d op t e d a r e l at i v e l y l i b e r al s t a n c e b y a l l o wi n g m o r e e q ui t y.

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11 Th e c o r r up t i o n h a s b e e n c o ns i d e r ed a s a m a j o r o bs t a cl e b y t h e M NC s w h e n i n v e s t i n g i n In d i a . A s a w h ol e n at i o n , In d i a r a n k ed 1 42n d ou t o f 18 9 n a t i o ns i n t h e E as e of D oi n g Bu s i n e s s I n d e x8 i n 2 0 14 . It i s c on s i d e r e d c o r ru pt i o n i s s t i l l l a r ge . In a d di t i o n, t h e f e d e r al i s m i s m a k i n g t h i s i s su e m o r e c om pl ex t o t h e M NC s s i n c e t h e l e v el o f c o r r up t i o n di f f e r s l a r ge l y d e p e nd i n g on e a c h s t at e ( s e e F i gu r e 1 ) . H o w e v e r , A a m A a dm i P a rt y ( A A P ), wh i c h i s a s t at e p ol i t i c a l p a r t y b a s e d o n D el hi ( NC R ) p ut t i n g u p a n i d e ol o g y o f a n t i - c o r r up t i o n, h a s w o n 2 8 ou t o f 70 s e at s i n t h e 2 01 3 D e l h i l e gi s l a t i v e as s e m bl y e l e c t i o n. W i t h n o p a r t y ob t ai n i n g a n o v e r al l m a j o r i t y, t h e A A P e m e r ge d a s t h e s e c o nd l a r ge s t p a rt y i n N C R . In t h e 2 0 14 In d i a n ge n e r a l el e c t i o n ( w h i ch w a s h e l d t o c on s t i t u t e t h e 1 6t h Lo k S a b h a, e l e ct i n g m em b e rs o f p a r l i a m e nt f o r a l l 54 3 p a r l i am e nt a r y c on s t i t u e n ci e s o f In d i a . R un i n ni n e p h a s e s f r om A p ri l 7 t o M a y 1 2 , 2 01 4 ) , t h e B h a r a t i ya J an a t a P a r t y ( B J P ) w on 31 . 0 % o f a l l v ot e s a n d 2 8 2 ( 51 . 9 % ) o f al l s e a t s9. F o r r e s ul t s o f t h e n a t i on a l an d r e gi o n al p a rt i es b y a l l i a n c e s , s e e t h e fi g u r e b e l o w ( F i gu r e 2 ) . It w a s t h e fi r s t t i m e s i n c e t h e 19 8 4 In d i a n ge n e r a l e l e ct i o n s t h at a s i n g l e p a r t y wi n ni n g e n o u gh s e a t s w i t h o u t t h e s up p o r t o f o t h e r p a rt i e s . T h e BJ P p a rl i am e n t a r y l e a d e r N a r en d r a Mo di , wh o l e d a p os i t i v e F D I po l i c y a s t h e p r ev i ou s S t a t e P ri m e M i ni s t e r o f G u j a r at , w a s s w o r n i n a s t h e 1 5t h P r i m e M i ni s t e r o f In di a on 26 M a y 2 0 1 4 . 8 W o r l d B a n k “ D oi n g B us i n es s 2 0 15 E c on om y P r o fi l e 2 01 5 In di a ” ( 20 1 4 ) 9 S ou r c e : El e c t i o n C om m i s s i on o f In d i a “ G e n e r al El e c t i o n t o Lo k S a bh a T r e nd s & R e s ul t 2 01 4 ”

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12

F i gu r e 1. S t at e - W i s e C o r ru p t i o n In d ex ( 2 00 5 )

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13

F i gu r e 2 . R e s ul t s o f t h e n at i o n a l a n d r e gi on a l p a r t i e s b y a l l i a n c es

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14 U nd e r t h e F o r e i gn E x ch a n ge M a n a ge m e n t A c t ( F E M A ) , f o r e i gn i n v e st m en t w a s i nt r od u c e d t o In di a i n 1 99 1 . T h e t h e n F i n a n c e M i ni s t e r w a s M a nm o h an S i n gh ( S i n gh w a s t h e p r e vi o us P r i m e M i ni s t e r ) . In S e p t em b e r 2 0 12 , a n e w F D I p ol i c y i n r e t a i l w as i n t ro d u c e d. Th i s a l l o w ed a f ul l f o r ei g n i nv e s t m e nt i n s i n gl e b r a nd r e t ai l , a n d 51 % i n m u l t i b r a nd r e t ai l . B e s i d e s r e t ai l , t h e go v e rn m e nt al l o ws F D I i n ph a r m a c e ut i c al i n d u s t r y ( 1 0 0 % ) , t e l e c o m m un i c at i on i n d us t r y ( 1 0 0 % ) , a nd i n s u r an c e i n d us t r y ( 4 9 % ) a m on gs t ot h e r i nd u s t r i es . In t h e C o ns o l i da t e d F D I P ol i c y o f t h e D e p a rt m e nt o f In d u s t ri a l P o l i c y a n d P r om o t i o n, M i ni s t r y o f C o m m e r c e a n d Ind u s t r y, G o v e rn m e n t o f In di a , i t i s w ri t t e n as b el o w : “ I t i s t h e i n t e nt an d ob j e c t i v e of t h e Go v e r n m e n t of I nd i a t o at t r a c t a nd pr o m ot e f o r ei g n di r e c t i n v es t m en t i n o r d er t o s u p pl e m e nt d om e s t i c ca p i t al , t e c h no l og y an d s k i l l s , f o r a c c e l e r a t e d e c o no m i c g r o w t h . F or e i gn Di r e c t I n v e s t m e nt , a s d i s t i n gu i s h e d f r o m portfolio investment, has the connotation of establishing a ‘lasting interest’ in an enterprise that is resident in an economy other than that of the investor.”1 0

1.5. Why region-sector-wise India is the Subject

Th e R ep u bl i c o f In d i a ( s e e F i gu r e 3 ) i s a f e d e r at i o n c on s i s t i n g 29 s t a t e s (t h e 29t h s t a t e T e l a n ga n a w a s d i v i d ed f r om An d h r a P r a d es h on J u n e 2, 20 1 4 ), a n d e a c h o f t h em o wn s a st r o n g a ut o no m y. T h e di v e r s i f i c a t i on o f po l i t i c a l p a r t i e s d u e t o t h e ri s e o f l o c a l p a rt i es c a u s ed po l i t i c a l 1 0 Go v e r nm e n t o f In di a “C o ns ol i d at e d F D I P ol i c y ” [ C h a p t e r -1 , 1 . 1, 1. 1 .1] ( E f f e c t i v e f ro m A p ri l 1 7 , 2 01 4 )

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15 d e c e n t r a l i z a t i o n o f po w e r . Th e r e f o r e f r om 19 9 0 o n w a rd s , t h e p r om o t i on o f i nd u s t r i al p o l i c y, i n f r a s t r u ct u r e d e v e l op m e nt , p r e p a r a t i o n o f e du c a t i o n a l f a c i l i t i e s , e t c. h as b e e n c a r r i ed ou t b y e a c h s t a t e go v e r nm e nt . F o r i ns t a n c e i n G u j a r a t , po s i t i v e F D I p o l i ci e s l e a d t o a r a pi d e c o no m i c gr o w t h ( t h e t h e n S t a t e P ri m e M i n i s t e r w a s t h e c u r r e nt F e d e r a l P ri m e Mi ni st e r N a r e n d r a M o di ) . F i gu r e 3 . T h e P o l i t i c a l M a p o f In d i a S o u r c e: w w w. m a ps o fi n di a . c om ( 20 1 4 )

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16 Th e r e a r e m ai nl y t w o r e a s o ns wh y In d i a w a s c h os e n a s t h e s u bj e c t f o r t hi s s t u d y. F i r s t l y, In d i a h a s b e en ex p e ri e n c i n g a r a p i d e c on o m i c gr o w t h s i n c e t h e 2 0 00 s (s e e F i gu r e 4 ) . In t h e l at e 2 00 0 s , i t s gr o w t h r a t e r e a c h e d 7 . 5 %, a nd t hi s d o ub l e d t h e a v e r a ge i n c om e i n a d e c a d e . A s t h e e c o no m y gr e w t h e F D I i n fl o ws h a v e a l s o i n c r e as e d r a pi dl y ( s e e F i gu r e 5 ). In a d di t i o n, a r e c e nt U NC T A D s u r v e y s h o w s In di a a s t h e s e c o n d m o s t i m po r t a nt F D I d es t i n a t i on a f t e r C hi n a, e s p e ci a l l y f o r t r a ns n a t i o n al c o rp o r a t i o ns f r om 2 01 0 t o 2 0 121 1. Th e r e f o r e, In d i a h as b e en r e c o gn i z e d a s a h u ge m a rk e t an d a l s o a s a d e st i n a t i on o f F D I a m o n g t h e wo r l d . It i s ob v i o u s t h a t t h e s t u d y a b o u t F D I t o w a r d s In d i a m u s t b e d on e fu r t h e r i n o rd e r t o ga i n b e n e f i t fo r bo t h t h e h os t a n d h om e i n v e s t i n g c o un t ri e s . S e c o n dl y, i t i s n e c e s s a r y t o a n al yz e t h e Ind i a n F D I i n f l o ws r e gi o n - wi s e t o i m pl e m en t an ou t - a nd - o ut d e v el op o f t h e In d i a n e c o n om y a s a w ho l e n at i o n . T h e c u r r en t F D I t o w a r ds In d i a a r e c on c e n t r at e d t o s om e r e gi o ns a s s ho w n i n t h e t a bl e b e l o w ( s e e T ab l e 2 ) . A s m e nt i on e d i n 1 .4 G o v er n m e nt of I nd i a F D I P ol i ci e s a n d t h e p r e v i o u s p a r a gr a p h , In d i a `s po l i t i c a l s t at u s i s c o m p l ex d u e t o l o c a l p ol i t i c al p a rt i es a n d c o r ru p t i on . Th e r e f o r e , t h e R e p u bl i c o f In d i a i s r e c e nt l y e x p e ri e n ci n g a hu ge s o c i al -e c o no m i c t r a n s i t i o n a nd d -e v -el o pm -e nt . T hi s i s w h y i t i s wo r t h s t u d yi n g on F D I t o w a r ds In d i a r e gi on - w i s e . 1 1 S ou r c e : B h a v ya M a l h ot r a “ F o r e i gn Di r e c t In v e s t m e n t : Im p a c t o n In d i a n E c o no m y ” ( 2 01 4 ) , p . 1 8

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17 F i gu r e 4 . G DP p e r c a pi t a an d G DP gr o w t h r at e o f In di a 1 96 0 - 20 1 2 F i gu r e 5 . F o r e i gn Di r e c t In v e s t m e n t n e t i n fl o ws 19 6 0 - 20 1 2 -8 -6 -4 -2 0 2 4 6 8 10 12 0 200 400 600 800 1000 1200 1400 1600 1800 19 60 19 63 19 66 19 69 19 72 19 75 19 78 19 81 19 84 19 87 19 90 19 93 19 96 19 99 20 02 20 05 20 08 20 11

Source: World Development Indicators

GDP per capita (current US$) GDP growth (annual %) 0 10000000000 20000000000 30000000000 40000000000 50000000000

Source: World Development Indicators

Foreign direct investment, net inflows (BoP, current US$)

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18 T a bl e 2 . S t at e - w i s e N um b e r o f A pp r o v al s a n d A m ou nt A pp r o v ed o f F D I A u gu st , 1 9 91 - D e c e m b e r . 2 0 04 ( c i t e d f r om “ Im p a c t o f F D I i n In d i a : S t at e - W i s e A n a l ys i s i n an E c on om i c F r a m ew o r k ” b y V a n i A r c h a n a, N .C . N a ya k & P . B a s u, 20 1 4 ) St a t es / UT s N o. of A p pr ov a l s FDI A p pr ov e d (Rs. Mi l l i o n) A mt. of F DI A pp r ov e d (U S$ . Mi l l i o n) A nd h r a. P 1 2 9 6 1 1 6 3 4 4 .4 3 0 5 5 . 1 2 As sam 1 9 1 4 .9 5 0 .4 8 Bi h ar 4 9 7 3 9 7 . 0 5 1 8 0 .1 8 Gu j ar at 1 2 4 2 1 2 4 6 2 5 .1 3 2 7 8 . 2 4 Ha ry a na 8 8 2 3 8 7 6 3 .0 8 1 0 2 0 . 3 8 H im a ch a l . P 1 0 2 1 2 2 6 6 .4 5 3 0 9 .4 3 J&K 5 8 4 .1 2 .4 2 Ka rn at ak a 2 6 4 9 1 9 0 9 6 3 .9 4 8 3 7 . 2 2 Ker a la 3 3 6 1 7 8 1 5 .4 2 4 4 6 .6 9 M a dh y a . P 2 4 3 9 2 7 1 4 .0 8 2 5 2 0 . 9 3 M a ha ra s ht ra 5 0 6 4 3 7 1 0 7 7 .9 9 6 4 0 . 3 7 M a ni p u r 2 3 1 .8 5 0 .8 9 M eg h al ay a 5 5 2 9 .6 1 3 .6 6 Na g a la n d 2 3 6 .8 1 .0 3 Or is sa 1 4 1 8 2 2 9 3 .1 3 2 3 5 5 . 7 8 P u nj a b 2 0 3 2 1 3 0 3 .5 4 5 3 4 .9 8 Ra ja st h a n 3 4 4 2 9 1 1 2 .1 1 7 8 2 .2 9 Tam il Na d u 2 6 8 6 2 2 6 5 1 2 .9 5 8 9 5 . 9 9 Tr i pu r a 4 3 0 .8 8 0 .7 4 Utt a r. P 8 1 5 4 8 3 6 5 .6 3 1 3 0 7 . 9 3 Wes t B e ng a l 6 8 9 7 7 9 7 1 .3 2 1 6 7 . 0 3 Ch h at ti s ga r h 4 8 6 3 6 3 . 0 3 1 8 3 .3 3 J ha rk h a n d 8 1 1 4 6 5 . 1 5 4 2 .6 7 Utt a ra nc h a l 5 2 1 2 5 6 . 4 9 3 8 .6 6 Ar u n ac h al . P 2 1 1 0 .6 3 .5 2 Ch a n di g a rh 8 6 3 2 4 1 . 7 8 0 .3 4 D el h i 2 8 1 6 3 0 5 2 2 6 .3 8 4 4 5 . 3 6 Go a 2 8 5 9 9 9 3 . 7 8 2 5 1 .9 3 P o n d ic he rr y 1 3 0 1 2 8 6 1 .5 3 3 1 3 .7 4 S o u r c e: M i ni s t r y o f C o m m e r c e a nd In d u st r y, G o v e r n m e nt o f In d i a

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19

1.6. Literature Review

Al t ho u gh t h e s t ud i e s o n F D I d e t e r m i n an t s i n t h e c o nt ex t o f Ind i a e s p e c i a l l y t h o s e wh i c h w e r e a n a l yz e d s t a t e - wi s e a r e v e r y l i m i t e d , t h e r e a qu i t e a f e w s t u d i es do n e on v a ri o us r e gi on s . In t hi s s e c t i o n , ho s t c ou n t ri e s ` e c o n om i c d e t e r m i n an t s o f F D I i n p r e v i o u s s t u di e s wo ul d b e i n v e st i ga t e d. M o s t o f t h em c o n cl u d e t h at t h e m a i n d et e r m i n a nt s a r e M a rk e t s i z e ( GD P ) , La b o r c os t , In f r a s t r u c t u r e , C u r r e n c y v a l u e , G r o s s C a p i t a l f o r m at i o n ( gr os s d om e s t i c i n v es t m en t ), c o un t r y r i s k , i n f l at i o n r a t e, i n t e r es t r at e , gr o wt h r a t e , t r a d e o p e nn e s s r a t e (t h e p e r c e nt a ge o f ex p o r t s o r i m p o rt s i n t h e n a t i on ’ s G DP ) , Ex t e rn a l d e b t , a n d s o o n. B e l o w a r e s o m e o f t h e m a j o r a n d r e c en t s t u d i e s. M o o s a ( 2 00 2 )1 2 s u r v e ys t h e t h e o ri e s o f F D I, e s p e ci a l l y v a r i a bl e s t h a t w e r e n ot r e a di l y r e l a t e d t o a n y o f t h e t h eo r i e s a t t h at t i m e. M o s t o f t h e v a ri a bl e s i n v es t i ga t e d i n t hi s s t u d y c ou l d b e i n cl u d e d i n t h e U NC T A D `s c l as s i f i c a t i on1 3 o f t h e d e t e rm i n an t s o f i n w a r d F D I s h o wn i n t h e t a b l e b e l o w ( T a b l e 3 ) . 1 2 Im a d A. M o o s a “ F o r e i gn Di r e c t In v e s t m e nt Th e o r y, E vi d e n c e a nd Practice” (2002) 1 3 U NC T A D “W o r l d Inv e s t m e nt R e p o rt 20 02 T r a ns n a t i on a l C o r po r a t i o ns a nd Ex p o r t C o m p e t i t i v e n e s s ” ( 20 0 2 )

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20 T a bl e 3. Th e U NC T A D `s C l a s s i fi c a t i o n o f F D I D e t e r m i n an t s D e t e r m i n i n g v a r i a b l e s E x a m p l e s P o l i c y v a r i a b l e s T a x p o l i c y, t r a d e p o l i c y , p r i v a t i z a t i o n p o l i c y , m a c r o e c o n o m i c p o l i c y B u s i n e s s v a r i a b l e s I n v e s t m e n t i n c e n t i v e s M a r k e t - r e l a t e d e c o n o m i c d e t e r m i n a n t s M a r k e t s i z e , m a r k e t g r o w t h , m a r k e t s t r u c t u r e R e s o u r c e - r e l a t e d e c o n o m i c d e t e r m i n a n t s R a w m a t e r i a l s , l a b o r c o s t , t e c h n o l o g y E f f i c i e n c y - r e l a t e d e c o n o m i c d e t e r m i n a n t s T r a n s p o r t a n d c o m m u n i c a t i o n c o s t s , l a b o r p r o d u c t i v i t y S o u r c e: U NC T A D (2 00 2 ) M o o s a a n d C a r d a k ( 20 0 6 )1 4 ex a m i n e d t h e d et e r m i n a nt s ap p l yi n g a n al ys i s t o c r o s s - s e c t i on a l d a t a o n 1 3 8 c ou n t ri e s . T h e r e s ul t s r ev e a l t h r e e r ob u s t d et e r m i n an t s . Ex p o rt s as a p e r c e nt a ge o f G DP , t el e p ho n e l i n es p e r 1 0 00 o f t h e p o p ul a t i on , a nd c o un t r y r i s k . A s a c o n c l u s i o n, i t i s s t a t ed t h a t i n d e v el o pi n g c o un t ri e s wi t h l a r ge e c o no m i e s , a h i gh d e gr e e o f o p e nn e s s a n d l o w co u nt r y r i s k t en d t o b e m o r e s u c c e s s f ul t h a t o t h e r s i n at t r a c t i n g F D I. Ç E V IS a n d Ç AM U R D A N ( 2 0 07 )1 5 d ev e l o p ed a n em pi r i c al f r a m e wo r k t o es t i m a t e t h e e c o no m i c d et e rm i n an t s o f F D I b y a do p t i n g a p an e l d a t a s e t o f 17 d ev e l op i n g c ou n t ri e s a n d t r a ns i t i o n e c o no m i e s fo r 1 4 Im a d A. M o o s a, B u l y A . C a rd a k “ Th e d e t e rm i n a n t s o f f o r ei gn di r e c t investment: An extreme bounds anal ysis” (2006)

1 5

Đs m ai l Ç e vi s a n d B u r ak Ç am u r d an ” T h e E c o n om i c D e t e rm i n a nt s o f F o r e i gn Di r e c t In v e s t m e nt i n D ev e l op i n g C ou n t ri e s an d T r a n s i t i on Economies” (2007)

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21 t h e p e ri o d o f 1 9 89 - 2 00 6 . T h e y u s e d s e v e n v a r i ab l e s : t h e p r e v i o us p e ri o d F D I ( t h e pu l l f a c t o r f o r n e w F D I) , G D P gr o w t h ( m e as u r e s m a r k et s i z e ) , w a ge ( u ni t l a bo r c o s t s ) , t r a d e R at e ( m e a s u r e s t h e o p e n n es s o f co u nt r i e s ), t h e r e a l i n t e r e s t r at e s ( m e a s u r e s m a c r o e c on o m i c po l i c y) , i n fl a t i on r a t e ( a s c o u nt r y r i s k a nd m a c ro e c o n om i c p ol i c y) , a n d d om e s t i c i n v es t m e n t ( b u s i n e s s c l i m at e ) . In t hi s p a p e r i t w a s f ou n d o ut t h a t F D I o f t h e p r ev i ou s p e r i od w hi c h i s di r e c t l y r e l a t e d t o t h e h os c ou n t ri e s ` e c o n om i c r e s o u r c e s i s i m p o rt a nt a s a n e c on om i c d e t e rm i n a n t . In a d di t i on , i t r e v e al e d t h e m a i n d e t e rm i n a n t s a r e i n fl a t i on r a t e, i n t e r e s t r a t e, gr o w t h r a t e, a n d o p en n e s s r a t e. Az a m a n d Lu k m a n ( 20 1 0 )1 6 ex a m i n e d a v a ri o us e c o no m i c f a c t o rs ` e f f e c t s on F D I i n f l o w s i n t h e c o nt ex t o f P a k i s t an , In d i a, a n d In d o n es i a . Th e s t u d y p e r i o d r a n ge d f r om 1 9 7 1 -2 0 0 5. T h e r e s ul t s r e v e al e d t h at m a rk e t s i z e, ex t e r n a l d e bt , d om e s t i c i n v e st m en t , t r a d e o p e n n es s , a n d ph ys i c a l i n f r as t r u ct u r e a r e t h e i m p o rt a n t d et e r m i n a nt s o f F D I. It w a s a l s o co n c l u d e d t h at t h e r e s u l t s o f t h e d e t e rm i n a nt s o f In d i a m at c h e d t h os e o f P a ki s t a n `s , ex cl u di n g t r a d e o p e nn e s s a n d go v e rn m e nt c on s um pt i on . Fi n a l l y, i t p r o p os e d t h at t h e m a n a ge m e nt a ut h o ri t i e s o f t h e t h r e e c o un t ri e s n e e d t o en s u r e e c o n om i c a nd p ol i t i c a l s t a bi l i t y, p ro v i s i o n o f i n f r a s t r u ct u r e , p e a c e a n d s e c u ri t y, l a w a nd o r d e r s i t u a t i on , e n c ou r a ge m e n t o f d om e s t i c i nv e s t m e nt , c u rt a i l ex t e r n a l d e bt , a n d eq u a l i m po r t a n c e b e gi v e n t o ap p r op r i at e m o n e t a r y a n d f i s c a l p ol i c y. 1 6 M u h am m a d Az a m , Li n g Lu k m a n “ D e t e r m i n an t s o f F o r ei gn Di r e c t Investment in India, Indonesia and Pakistan: A Quantitative Approach” ( 20 1 0 )

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22 Vi j a ya k u m a r, S r i dh a r a n, a n d R a o ( 2 01 0 )1 7 i m pl e m en t e d a n ex am i n at i o n co n c e nt r a t i n g o n t h e F D I t o w a r ds B R IC s c o u nt r i es us i n g d at a f r om t h e p e ri o d o f 19 7 5 - 20 0 7. T h e st ud y f i n ds ou t t h at m a rk e t s i z e, l ab o r co s t , i n f r a s t r u c t u r e , c ur r e n c y v a l u e a nd g r o s s c a p i t a l f o rm a t i o n a s t h e po t e nt i al d et e r m i n a nt s o f F D I i n f l o w s o f BR IC S c ou n t ri e s . Th e e c o no m i c s t a bi l i t y a nd g r o w t h p r os p e c t s (m e a s u r ed b y i n f l at i o n r at e a nd i n d us t ri a l p r od u c t i o n r e s p e ct i v e l y) , t r ad e o p e n n es s (m e a s u r e d b y t h e r a t i o o f t ot a l t r a d e t o G D P ) s e em e d t o b e t h e i n s i gn i fi c a n t d e t e rm i n a n t o f F D I i n f l o ws o f t h e B R IC S c ou n t ri e s. In M a ggo n `s ( 2 01 2 )1 8 st ud y, i t i s c on c l ud e d t h at t h e b o os t F D I i n f l o w s s i gn i fi c a nt l y d e p e n d on f u rt h e r l i b e r al i z at i on o f i t s f o r ei gn i n v e st m en t r e gi m e . Th e r e s ul t s o f t h e a b ov e m en t i o n e d e m pi ri c a l s t ud i es o n t h e F D I d et e r m i n a nt s a r e l i s t e d i n t h e f ol l o wi n g t a bl e ( T a bl e 4 ). 1 7 N a r a ya n a m u rt h y V i j a ya k u m a r , P e r um a l S r i d h a r a n , K o d e C h a nd r a S e k h a r a R a o “ D et e r m i n an t s o f F D I i n B R IC S C o un t ri e s : A p a n el anal ysis” (2010) 1 8 M o hi t a M a g go n “E c on o m i c a nd P ol i c y D et e r m i n a nt s o f F o r e i gn Di r e c t Investment: An Empirical Anal ysis in Context of India” (2012)

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T a bl e 4. Th e R es ul t s o f t h e Em pi r i c a l S t ud i e s o n t h e D e t e rm i n a nt s o f F D I

Empirical Studies The Determinants of FDI

UNCTAD (2002) Tax policy, trade policy,

privatization policy, macroeconomic

policy, investment incentives, market size, market growth, market structure, raw material s, labor cost, technology transport and communication costs, labor productivit y.

Moosa and Cardak (2006) Exports as a percentage of GDP,

telephone lines per 1000 of the population, and country risk.

ÇEVIS and ÇAMURDAN (2007) FDI inflows of the previous

period, inflation rate, interest rate, growth rate, and openness rate.

Azam and Lukman (2010) Market size, external debt,

domestic investment, trade openness, and physi cal infrastructure.

Vijayakumar, Sridharan, and Rao

(2010) Market size, labor cost, infrastructure, currency value

and gross capital formation .

Maggon (2012) Liberalization of its foreign

investment regime .

In t hi s p a p e r , t h e d e t e rm i n a nt s o f F D I t o w a r ds In d i a (d a t a f r om t h e p e ri o d 2 00 8 - 20 1 3 ) w ou l d b e ex a m i n ed r e gi o n - wi s e, us i n g s t at e - w i s e d a t a . S e c t o r - wi s e G D P w o ul d b e us e d a s a v a ri a bl e i n o rd e r t o a n al yz e w h i ch m a rk e t b e i n g t h e s i g ni f i c a nt d e t e r m i n an t .

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24

2. Data

2.1. Sample States, Union Territories, and Regions

24 s t a t es a n d U ni o n T e r ri t o ri e s o f t h e R e pu b l i c o f In d i a w e r e s e l e c t ed . It c on s i s t s A nd h r a P r a d es h , B i h a r , C hh a t t i s ga r h , G o a , G u j a r at , H a r ya n a , Hi m a c h al P r a d e s h , J h a rk h a n d, K a r n at a k a , K e r a l a , M a d h ya P r a d es h , M ah a r a s ht r a , Od i s h a , P u n j ab , R a j as t h an , S i k ki m , T a m i l N a d u, Ut t a r P r a d e sh , Ut t a r a kh a n d, W e s t B e n ga l , An d a m an & N i co b a r Is l a nd s , C h a n di ga r h , N at i on a l C ap i t a l T e r ri t o r y o f In d i a (D e l hi ) , an d P o nd i c h e r r y. 1 2 s t a t es a n d U ni o n T e r ri t o ri e s w e r e ex c l u d e d d u e t o t h e r e a s o n s m en t i o n ed b el o w . T h e s e v e n s t a t e s o f N o rt h - E as t In di a ( A r u n a c h al P r a d e sh , As s a m , M a ni p u r , M e gh a l a ya , M i z o r a m , N a ga l a n d , an d T ri p u r a ) w e r e ex cl u d ed du e t o t h e l a c k o f d a t a . J a m m u & K a s hm i r w e r e c on s i d e r e d no t a p p r op r i at e f o r t hi s s t u d y b e c a u s e o f t h e c on t i nu o us i n s e c u ri t y o f t h e s o c i al s i t u a t i on . T el a n g a n a , a l s o du e t o t h e s o c i al i n s e c u ri t y, b u t a l s o s i n c e t h e s t at e h as j us t b e c o m e i n d e p e n d en t f ro m A nd h r a P r a d e s h i n 2 01 4 , c u r r e n t l y n o d a t a ex i s t s . In t h i s p ap e r , A n dh r a P r a d e sh a n d T e l an ga n a w o ul d b e c o ns i d e r e d a s a s i n gl e s t a t e e qu a l l y a s i t w as un t i l J un e 1 , 20 1 4. T h r e e U n i o n T e r ri t o ri e s ( D a d r a a nd N a ga r H a v el i , D a m an a n d Di u , a n d La k s h ad w e e p ) w e r e c o ns i d e r ed t h at t h e y d o no t h a v e a l a r ge s i z e o f e c o no m y e n o u gh t o h a v e a n i n f l u en c e t o F D I i n f l o w s . In o r d e r t o i m p l em e nt t h e a n al ys i s , 15 s t at e s a n d Un i o n T e r r i t o ri e s a m o n g t h e s el e c t e d 24 w e r e di vi d e d i nt o s i x gr o u p s a s r e f e r r e d i n t h e

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25 f ol l o w i n g d u e t o t h e fo r m o f F D I d a t a c o m p i l e d b y t h e D ep a r t m e nt o f In d u s t r i al P ol i c y & P r om o t i o n, G ov e r n m en t o f In d i a. 1 .U t t a r P r a d e s h & Ut t a r a kh a n d , 2 . T a m i l N a d u & P o n di c h e r r y, 3 . W es t B e n ga l , S i kk i m , & A nd a m a n & N i c ob a r Is l a nd s , 4 .M a d h ya P r a d e s h & C h h a t t i s g a r h, 5. P u n j ab , C h a nd i ga r h, H a r ya n a , & H i m a c h al P r a d e s h, 6. B i h a r & J ha r k h a nd . T h us , t h e r e a r e 1 5 t a r ge t s t a t es , U n i o n T e r ri t o r i e s a n d r e gi o ns a s s ho w n i n t h e fi gu r e b e l ow . ( F i gu r e 6 ) F i gu r e 6. G e o gr a p h y o f 15 T a r ge t S t at e s , Un i o n T e r ri t o r i e s a nd R e gi o n s ( N at i on a l C a pi t al T e r ri t o r y o f In d i a : D e l hi i s n o t s ho w n d u e t o t h e s i z e . )

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26

2.2. Data Description and Theory

In t hi s s t u d y, i n o r d e r t o an a l yz e t h e d e t e r m i n a nt s o f F D I i n In d i a , t e n v a ri a b l es a r e i n cl u d e d. A m o n g t h em F D I i s t h e ex pl a i n ed v a ri a b l e , a n d t h e ot h e r n i n e a r e ex pl a n a t o r y v a r i a bl e s. Th e t e n v a ri a b l es a r e c on s i d e r e d a s s ho w n i n T a b l e 5 . T a bl e 5. Li s t o f V a r i a bl e s Explanat or y Variable

Defini tion The Dir ect ion of Expected Eff ect Reasons f or Inclusion 𝐺𝐷𝑃_{𝑖(𝑡−1)} GDP (curr ent Indi an Rupee i n cror e)

None Indi cat es mar ket si ze of the whole st ate.

Gener all y i t i s consi dered larger mar kets recei ve more FD I.

GDPPC𝑖(𝑡−1) GDP per capita

(cur rent Indian Rupee i n cr ore)

+ Indi cat es cit i zens ’ affl uence ( li vi ng standard) and mar ket si ze.

𝐸𝑋𝑃𝐸𝑃𝐶_{𝑖(𝑡−6)} Expendi tur e on educat ion per capi ta (curr ent Indi an Rupee i n cror e)

None Indi cat es the qualit y of human capit al. T he transfer of advanced technology requires t he presence of human capi tal .

𝐻𝐿_{𝑖(𝑡−1)} Lengt h of st ate and nati onal hi ghways ( km)

+ Indi cat es the stat e capacit y of FD I

accept ance in t he context of infr ast ructur e

devel opment . 𝐻𝐷𝑖(𝑡−1) Hi ghway densit y

( km per 100 sq. km of land ar ea )

+ Indi cat es infrastr uct ure facili ties, the ease of i mplementi ng business. 𝐺𝐷𝑃𝑆_{𝑖(𝑡−1)} GDP of ser vice

sect or ( curr ent Indi an Rupee i n cror e) + ( expected t o have a si gnifi cant eff ect .)

Indi cat es mar ket si ze of the tertiar y (ser vice) sect or.

𝐺𝐷𝑃𝑀_{𝑖(𝑡−1)} GDP of mi ning and quarr ying sect or

+ or - (in resour ce -rich states)

Indi cat es mar ket si ze of the mining sector.

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27

𝑇𝐸𝐿_{𝑖(𝑡−1)} Number of telephone s per 100 popul ati ons

+ Indi cat es infrastr uct ure facili ties, the ease of i mplementi ng business. 𝑁𝐺𝑃_{𝑖(𝑡−1)} Amount of

nat ural gas produced ( mi llion metri c standard cubi c meter s)

+ Indi cat es resource rel ated economi c deter mi nant s.

Response Variable Defini tion

𝐹𝐷𝐼_𝑖𝑡 FDI (current Indian Rupee in cr ore)

e . g. : 𝐺𝐷𝑃_{𝑖(𝑡−1)} s t a n d f o r t h e G DP o f s t a t e s o r Un i o n T e r r i t o r y o r r e gi on ( h e r e , t h e s t a t e s t h a t w e r e d i v i d ed i n s i x gr o u ps ) i a t t i m e t - 1 . D a ta s o u r c e G DP : M i n i s t r y o f St at i s t i c s a n d P ro g r a m m e I mp l e m en t at i o n G DP p e r c a p i t a : M i n i s t r y of St at i s t i c s a n d P r o g r a m m e I m pl e m e nt at i on , Mi n i s t r y of H o m e A f f a i r s Ex p e n di t u r e on e d u c a t i on p e r c ap i t a : B u dg e t d o c u m e nt s of t h e s t a t e go v e r n m e nt s , M i n i s t r y o f H o m e A f f ai r s Le n gt h o f s t at e a nd n at i o n a l h i gh w a ys : Mi n i s t r y of Ro a d T r an s po r t & Hi g hw a y s Hi gh w a y d e n s i t y: M i n i s t r y of Ro a d T r a n s p o r t & H i g hw a y s , Mi n i s t r y of H o m e A f f ai r s G DP o f s e r vi c e s e ct o r: Pl a nn i n g C o m mi ss i o n Go v e r n m e nt o f In d i a G DP o f m i ni n g a n d q u a r r yi n g s e c t o r : P l an n i n g C o m mi s s i o n G o v er n m e nt of I nd i a N um b e r o f t e l e ph o n e p e r 1 00 po p ul a t i o n s : D ep a r t m e nt of T e l e c o m mu ni c a t i o ns Mi ni s t r y of C o m mu ni c at i on s & I n f or m a t i on T e c h n ol og y Am o un t o f n at u r a l g a s p r od u c e d : M i n i s t r y o f P e t r o l e um & N a t u r a l Ga s E c on o mi c s a n d S t a t i s t i cs Di v i si on F D I: D e p ar t m e nt o f I nd u s t r i al P ol i c y & Pr o m ot i o n Mi ni s t r y of C o m m e r c e & I n d us t r y

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31

s e rv i c e s e c t o r, G DP o f m i n i n g a n d q u a r r yi n g s e c t o r , an d am ou n t o f n at u r a l ga s a r e i n c l u d ed a s an ex pl a n at o r y v a r i a b l e .

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4. Results and Analyses

Th e r e s ul t o f t h e r e gr e s s i o n a n al ys i s ( s e e Ap p e nd i x ) s ho w s t h a t t h e c o e f fi c i e nt s a r e s u f f i c ed f o r a l l t h e a n al ys i s do n e a m o n g a l l t h e gr o u ps . Th e r e f o r e , i t c o ul d b e s a i d t h a t t h e e q u a t i on i s a pp r o p ri a t e a nd c on c l us i v e i n ex pl a i ni n g t h e d et e r m i n a n t s o f F D I. T h e r es ul t s s ho w t h a t i n m o s t c a s es , t h e v a r i ab l e s u s ed i n t h i s s t u d y ( ex c l ud i n g e x p en d i t u r e o n e du c a t i o n p e r c a pi t a ) co u l d b e r e ga r d e d a s d e t e rm i n a n t s o f F D I i n t h e c on t ex t o f In d i a . In t h e f ol l o w i n g s e c t i o n, t h e d et e r m i n a nt s w ou l d b e a n al yz e d .

4.1. Results and Analyses on Explanatory Variables

G D P : In a l l c a s e s , t h e s t at e ’ s m a r k et si z e o f t h e i n i t i al ye a r s h o w e d a n e ga t i v e i n t e r r el a t i o n o r h a d no c o r r el a t i on wi t h t h e F D I . It c ou l d b e c on c l ud e d t h a t i n t h e r e c e nt ye a r s , t h e F D I t o w a rd In d i a a r e no t fo c u s i n g on t h e w ho l e In di a n m a rk e t . G D P p e r c ap i ta : It s h o w e d a p os i t i v e r e l at i o n wi t h t h e F D I ex cl u di n g t h e ri c h - r e s ou r c e d r e gi o ns w hi c h p r o du c e s a h u ge a m o u nt o f n a t u r al ga s . F r om t h i s r e s ul t , i t i s r e v e a l e d t h a t i n r i c h - r es o u r c e d r e gi o n s , t h e F D I a r e m a i nl y f o c u s i n g on t h e r a w m a t e ri a l s , r a t h e r t h an t h e m a r k et . In ot h e r s t at e s , i t c o ul d b e c o n cl u d ed t h a t a l a r ge r a t i o o f F D I a r e fo c u s e d on t h e l o c a l m a r k et .

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33 E xp e n d i tu r e o n e d u c a ti on p e r c ap i ta : In a l l c a s e s i t di d n ot h a v e a n y r e l at i o n wi t h F D I. It r ev e a l s t h at F D Is w hi c h t r a n s f e rs a dv a n c e d t e ch n ol o g y o n l y o c c up i e s a f r a c t i o n o f t h e w h ol e F D I i n f l o w . L e n g t h of s t a t e an d n a ti on al h i gh w a y s : It s h o w e d a po s i t i v e r el a t i o n, ex cl u di n g t h e r i c h -r e s o u r c e d r e gi on . T h i s r e v e a l s t h a t t h e c a p a ci t y o f d ev e l op i n g i n f r a s t r u c t u r e c o ul d b e c on si d e r e d a s a s i gni f i c a n t d et e r m i n a nt o f F D I. H i gh w ay d e n s i ty : It d i d n ot s h o w a n y p os i t i v e e f f e c t . T hi s r e s u l t c o ul d b e r e ga r d e d a s a r es ul t o f t h e r ap i d gr o wt h o f t h e t e rt i a r y s e c t o r , wh i c h r e qu i r e s f e w t r a n s po rt a t i o n i n f r as t r u ct u r e s . G D P o f s e r vi c e s e c t o r : It s h o w e d a si gn i f i c a nt po s i t i v e r el a t i o n i n a l l c a s es . It r e v e al s t h at o n al l r e gi o n s i n In di a , t h e F D I a r e f o c us e d o n t h e t e rt i a r y s e c t o r . G D P o f mi n i n g an d q u a r r yi n g s e c t o r : It s h o w e d a n e ga t i v e r e l at i o n on l y i n t h e r e gi o n w hi c h p o s s e s s n a t u r a l ga s , a n d i n o t h e r r e gi o ns i t d i d no t h a v e a n y c o r r e l a t i on . It i s co n si d e r e d t h at t hi s r es u l t i s c a us e d b y In d i a ’ s u ni q u e e n e r g y e n v i r o nm e nt . In m a n y r i c h - r e s o u r c ed r e gi o ns , t h e go v e r n m e n t o w n ed p ub l i c c o r po r a t i o ns a r e t h e d o m i n a nt a ct o r s . Th i s m ak e s t h e fo r e i gn e n e r g y e n t e r p ri s e s r e l u ct a n t t o a d v an c e t o In d i a. Nu mb e r of t el e p h o n e s p e r 10 0 p op u l a t i on s : It s ho w e d a p o s i t i v e r e l at i o n i n m os t c as e s . T hi s c o ul d b e c o ns i d e r e d a s a r e s ul t o f t h e r a p i d gr o w t h o f t h e G D P p e r c a pi t a a n d t h e G D P o f s e r vi c e s e ct o r .

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34 A mo u n t of n a t u ra l ga s p r od u c e d : S h o w e d a p os i t i v e r e l at i on ( a n al yz e d on l y i n r i ch - r e s ou r c e d < n a t u r al ga s > r e g i o n ) . C o m bi n ed w i t h t h e r es u l t o f G D P o f m i n i n g a nd qu a r r yi n g s e c t o r , i t r e v e a l s t h a t m a n y fo r e i gn e nt e r p r i s e s fo c u s o n t h e r es o u r c e , b ut do e s n ot i n v e s t d i r e c t l y t o p r od u c e m at e r i al s .

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35 概要回帰統計重相関 R 0.87311 重決定 R2 0.76232 補正 R2 0.738846 標準誤差 6233.438 観測数 90 分散分析表自由度変動分散観測された分散比有意 F 回帰 8 1.01E+10 1.26E+09 32.47438 3.1E-22 残差 81 3.15E+09 38855749 合計 89 1.32E+10 係数標準誤差 t P-値下限 95% 上限 95%下限 95.0%上限 95.0% 切片 -7971.66 2603.828 -3.06151 0.002988 -13152.5 -2790.86 -13152.5 -2790.86 GDP -0.08188 0.009514 -8.60615 4.78E-13 -0.1008 -0.06295 -0.1008 -0.06295 GDPPC 968351 474649.8 2.040138 0.044595 23946.72 1912755 23946.72 1912755 EXPEPC -6.6E+07 1.14E+08 -0.57819 0.56474 -2.9E+08 1.61E+08 -2.9E+08 1.61E+08 HL 0.684636 0.131923 5.189669 1.53E-06 0.422151 0.947121 0.422151 0.947121 HD -8037.95 2411.56 -3.33309 0.001297 -12836.2 -3239.7 -12836.2 -3239.7 GDPS 0.228197 0.023999 9.508404 7.87E-15 0.180445 0.275948 0.180445 0.275948 GDPM 0.027057 0.116934 0.23139 0.817595 -0.2056 0.259718 -0.2056 0.259718 TEL 59.63302 26.20715 2.275449 0.025521 7.489017 111.777 7.489017 111.777

4.2. Results and Analyses on States, Union

Territories, and Regions

Al l I n d i a a n a l ys i s ( s e e T a b l e 6 ): It r e v e a l ed t h a t ge n e r a l l y i n In d i a , t h e m a rk e t s i z e o f t h e s e r vi c e s e ct o r i n t h e i n i t i al ye a r h a s a s i g ni f i c a nt po s i t i v e r el a t i o n wi t h F D I i n f l o ws . O n t h e c o nt r a r y, t h e w h o l e m a r k et s i z e o f e a c h s t a t e i n t h e i n i t i al ye a r h a s a n e ga t i v e r e l a t i o n. In a d di t i o n, t h e hi gh w a y l e n gt h a l s o h a d a p o si t i v e r e l at i o n wh i l e t h e hi g h w a y d en s i t y h a d a n e ga t i v e r e l a t i on . Th i s c o ul d b e ex pl a i n e d b y t h e f o r ei gn enterprises’ focus on the service sector since it does not require much t r a n s po r t i n f r as t ru c t u r e.

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36 概要回帰統計重相関 R 0.904179 重決定 R2 0.817539 補正 R2 0.788918 標準誤差 5603.063 観測数 60 分散分析表自由度変動分散観測された分散比有意 F

回帰 8 7.17E+09 8.97E+08 28.564 2.8E-16 残差 51 1.6E+09 31394309 合計 59 8.78E+09 係数標準誤差 t P-値下限 95%上限 95%下限 95.0%上限 95.0% 切片 -8177.47 5134.316 -1.59271 0.117406 -18485 2130.103 -18485 2130.103 GDP -0.05278 0.020136 -2.62138 0.011514 -0.09321 -0.01236 -0.09321 -0.01236 GDPPC 919687.5 578333.4 1.590238 0.117962 -241365 2080740 -241365 2080740 EXPEPC -7.5E+07 1.39E+08 -0.53693 0.593648 -3.5E+08 2.04E+08 -3.5E+08 2.04E+08 HL 0.555429 0.178456 3.112407 0.003039 0.197163 0.913695 0.197163 0.913695 HD -2701.93 4925.482 -0.54856 0.5857 -12590.2 7186.388 -12590.2 7186.388 GDPS 0.170465 0.044727 3.811221 0.000374 0.080672 0.260259 0.080672 0.260259 GDPM -0.03725 0.369507 -0.10081 0.920096 -0.77907 0.704566 -0.77907 0.704566 TEL -28.5784 63.49682 -0.45008 0.654562 -156.054 98.89675 -156.054 98.89675 R e so u r c e - ri c h s t a t e s ( mi n e r al s ) a n a l ys i s ( s e e T ab l e 7 ) : A l t h ou gh n ot a s s i gn i fi c a n t a s ot h e r a n al ys e s , i t s ho w e d a p o s i t i v e r el a t i o n w i t h t h e m a rk e t s i z e o f t h e s e r vi c e s e ct o r . In a d d i t i o n , t h e i r r el a t i v e n e s s o f t h e m a rk e t s i z e o f t h e m i n i n g s e c t o r a n d F D I i n fl o w s i s no t a bl e . Th i s c o ul d b e ex pl a i n ed b y t h e do m i n a n c e o f t h e pu bl i c c o r p o r at i o n s t h a t a r e o wn e d b y t h e go v e r nm e n t o f In d i a a s m e nt i on e d ab o v e . T ab l e 7 . R es ou r c e - r i ch s t a t e s ( mi n e r al s ) an al y s i s

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37 概要回帰統計重相関 R 0.875855 重決定 R2 0.767121 補正 R2 0.662326 標準誤差 2238.099 観測数 30 分散分析表自由度変動分散観測された分散比有意 F 回帰 9 3.3E+08 36667432 7.320181 0.000112 残差 20 1E+08 5009088 合計 29 4.3E+08 係数標準誤差 t P-値下限 95% 上限 95%下限 95.0%上限 95.0% 切片 12755.51 8286.098 1.539386 0.139383 -4528.99 30040 -4528.99 30040 GDP 0.010354 0.02452 0.422286 0.677321 -0.04079 0.061502 -0.04079 0.061502 GDPPC -4307819 1884072 -2.28644 0.033268 -8237925 -377713 -8237925 -377713 EXPEPC 1.35E+08 2.63E+08 0.513456 0.613258 -4.1E+08 6.82E+08 -4.1E+08 6.82E+08 HL -0.29078 0.361281 -0.80485 0.430371 -1.04439 0.462841 -1.04439 0.462841 HD -6335.9 6423.39 -0.98638 0.335731 -19734.9 7063.059 -19734.9 7063.059 GDPS 0.024512 0.042935 0.57092 0.574414 -0.06505 0.114072 -0.06505 0.114072 GDPM -1.01678 0.568808 -1.78756 0.089012 -2.20329 0.169735 -2.20329 0.169735 TEL 257.5252 75.13689 3.427413 0.002667 100.7923 414.258 100.7923 414.258 NGP 8.823731 2.903508 3.038989 0.006481 2.767119 14.88034 2.767119 14.88034 R e so u r c e - ri c h s t a t e s ( n a t u ra l g a s ) an al ys i s ( s e e T a b l e 8 ) : It i s r e m a rk a b l e t h at t h e a m o u nt o f n at u r a l g a s p r od u c e d h a d a p os i t i v e r e l at i o n wi t h F D I i n fl o w s . A s m e nt i o n e d ab o v e , i t c ou l d b e c on s i d e r e d t h a t m a n y f o r e i gn e nt e r p ri s e s f o c u s o n t h e r e s o u r c e. T ab l e 8 . R es ou r c e - r i ch s t a t e s ( n a t u ra l g a s ) an a l y s i s

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38 概要回帰統計重相関 R 0.762284 重決定 R2 0.581077 補正 R2 0.456952 標準誤差 1762.957 観測数 36 分散分析表自由度変動分散観測された分散比有意 F 回帰 8 1.16E+08 14549800 4.681374 0.001118 残差 27 83916513 3108019 合計 35 2E+08 係数標準誤差 t P-値下限 95% 上限 95%下限 95.0%上限 95.0% 切片 -1241.84 3187.715 -0.38957 0.699909 -7782.49 5298.809 -7782.49 5298.809 GDP 0.001462 0.018272 0.079987 0.936838 -0.03603 0.038953 -0.03603 0.038953 GDPPC -190159 327099.6 -0.58135 0.565827 -861312 480993.7 -861312 480993.7 EXPEPC -2.5E+07 67562730 -0.36504 0.717922 -1.6E+08 1.14E+08 -1.6E+08 1.14E+08 HL 0.364747 0.165072 2.20963 0.035797 0.026048 0.703446 0.026048 0.703446 HD 4290.464 2092.354 2.050544 0.050134 -2.69138 8583.618 -2.69138 8583.618 GDPS -0.02613 0.064145 -0.40731 0.68699 -0.15774 0.105487 -0.15774 0.105487 GDPM -0.29328 0.301933 -0.97132 0.340008 -0.91279 0.32624 -0.91279 0.32624 TEL 23.74351 35.51199 0.668605 0.509424 -49.1211 96.60811 -49.1211 96.60811 B J P a d mi n i s t r a t i n g r e gi on s ( s e e T ab l e 9 ): Al t h o u gh t h e hi g h w a y l e n gt h a nd t h e m a rk e t s i z e o f t h e s e r vi c e s e ct o r s h o w ed a po s i t i v e r e l at i o n , i t di d n ot s h o w o t h e r n ot a bl e r e s ul t s . It c o ul d b e c o n cl ud e d t h a t f u rt h e r s t a t e - wi s e r es e a r c h o f t h e r e l at i on b et w e e n s t at e p a rt i es ’ F D I p ol i c y a n d F D I i n f l o w s a r e r e q ui r e d . T ab l e 9 . B J P ad mi n i s t r a ti n g r e gi on s

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39 概要回帰統計重相関 R 0.919616 重決定 R2 0.845693 補正 R2 0.81826 標準誤差 5502.25 観測数 54 分散分析表自由度変動分散観測された分散比有意 F

回帰 8 7.47E+09 9.33E+08 30.82824 8.3E-16 残差 45 1.36E+09 30274754 合計 53 8.83E+09 係数標準誤差 t P-値下限 95%上限 95%下限 95.0%上限 95.0% 切片 -6133.82 3654.51 -1.67843 0.100196 -13494.4 1226.737 -13494.4 1226.737 GDP -0.07944 0.022328 -3.55774 0.000895 -0.12441 -0.03447 -0.12441 -0.03447 GDPPC 765905.3 1097211 0.698047 0.488739 -1443992 2975803 -1443992 2975803 EXPEPC 1.4E+08 2.29E+08 0.611753 0.54378 -3.2E+08 6E+08 -3.2E+08 6E+08 HL 0.824847 0.174912 4.715792 2.35E-05 0.472557 1.177137 0.472557 1.177137 HD -12022.7 5118.663 -2.34879 0.023286 -22332.2 -1713.15 -22332.2 -1713.15 GDPS 0.216721 0.052934 4.094183 0.000174 0.110107 0.323335 0.110107 0.323335 GDPM 0.015683 0.196598 0.079771 0.936773 -0.38029 0.411652 -0.38029 0.411652 TEL 42.2738 96.38442 0.438596 0.663053 -151.854 236.402 -151.854 236.402 S t a t e ow n ed en t e r p r i s e s (S O E s ) ab u n d an t r e gi on s ( s e e T a bl e 10 ) : T hi s a n al ys i s d i d no t h a v e a n y r e m a r k a b l e r e su l t s co m p a r ed t o ot h e r a n a l ys e s . F u rt h e r s t ud y i s r eq ui r e d o n t h e r el a t i o n b e t w e e n S OE s a nd f o r ei gn e nt e r p r i s e s . T ab l e 1 0 . S ta t e ow n ed en t e r p r i s e s (S O E s ) a b u n d a n t r e g i o n s

Determinants of Foreign Direct Investment in India