Purpose

Although India is seen as a key player in the global economy, it is still below its potential level of growth. In this age of globalism, integration with the global economy through trade and foreign investments fosters domestic growth. For India, although this integration has strengthened over the years, there are certain gaps that remain to be addressed. Though numerous studies in the literature have tried to find answers to these questions, an important aspect that has not been considered by these studies relates to India’s federal structure and the role of states in determining the aggregate economic outcome. As Foreign Direct Investment (FDI) inflows to India are concentrated in a few states, this paper aims to provide an assessment of the reasons behind this trend.

Design/methodology/approach

This paper aims to investigate the reasons behind the interstate differences with respect to FDI inflows in India. The analytical work undertaken for this paper is based on secondary data, collected and collated from various sources. The approach adopted for this paper includes a heat graph analysis to examine whether there is a clear pattern in terms of the state-specific factors for high FDI states versus the low FDI states. This data analysis is followed by an econometric estimation to gauge the impact of state-specific factors in determining the FDI inflows.

Findings

As per the secondary data–driven heat graph and econometric analysis, factors like industrial output, social sector expenditure, judicial quality, connectivity indicators, labor cost and availability of credit, act as differentiators between high and low FDI-receiving states. It then becomes imperative to bridge the gap between the two sets of states in terms of these specific factors. Implementation and success of policy interventions can only be derived at the state level and therefore needs more decentralized approach.

Originality/value

This paper tries to identify the reasons that are responsible for FDI inflows being concentrated in a few Indian states. This involves a comprehensive analysis of several variables to understand whether there is a clear pattern where high-FDI states are also in a better position with respect to these attributes. This effort to factor in the federal aspect of a macroeconomic indicator like FDI provides new dynamic to this area of work.

中文翻译：

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境内因素在决定印度 FDI 流入的州级差异中的作用

目的

尽管印度被视为全球经济的关键参与者，但其增长潜力仍低于其水平。在这个全球化时代，通过贸易和外国投资融入全球经济可以促进国内增长。对于印度来说，尽管这种一体化多年来有所加强，但仍存在某些差距有待解决。尽管文献中的大量研究试图找到这些问题的答案，但这些研究尚未考虑的一个重要方面涉及印度的联邦结构以及各邦在决定总体经济成果中的作用。由于流入印度的外国直接投资（FDI）集中在少数几个邦，本文旨在评估这一趋势背后的原因。

设计/方法论/途径

本文旨在调查印度 FDI 流入的州际差异背后的原因。本文进行的分析工作基于从各种来源收集和整理的二手数据。本文采用的方法包括热图分析，以检查 FDI 高州与 FDI 低州的特定因素是否存在清晰的模式。该数据分析之后是计量经济学估计，以衡量特定国家因素对确定 FDI 流入量的影响。

发现

根据二手数据驱动的热图和计量经济分析，工业产出、社会部门支出、司法质量、连通性指标、劳动力成本和信贷可用性等因素是外国直接投资接收国高低之间的区别因素。因此，弥合两组国家在这些具体因素方面的差距就变得势在必行。政策干预措施的实施和成功只能在国家层面取得，因此需要更加分散的方法。

原创性/价值

本文试图找出导致外国直接投资流入集中于印度少数邦的原因。这涉及对多个变量进行综合分析，以了解是否存在一种明确的模式，即外国直接投资高的国家在这些属性方面也处于更好的位置。这种将外国直接投资等宏观经济指标的联邦方面纳入考虑因素的努力为这一工作领域提供了新的动力。