Industrial location in post-reform India: patterns of inter-regional divergence and intra-regional convergence

Where do new industrial investments locate, and what factors drive the industrial location decisions? Do these investments follow the model of 'divergence followed by convergence' suggested by the cumulative causation, agglomeration economies, and transport-costs approaches? These questions are examined with district-level data from India for the pre- and post-reform periods using: first, tables and maps of concentration and clustering, aggregated for all industry and disaggregated into five sectors (Heavy Industries, Chemicals and Petroleum, Textiles, Agribusiness, and Utilities), and second, logistic and OLS/Heckman selection regression models for these six elements. The data provide solid evidence both of inter-regional divergence and intra-regional convergence, and suggest that 'concentrated decentralisation' is the appropriate framework for understanding industrial location in post-reform India.