columns. All standard errors are robust to heteroskedasticity.<sup>12</sup> _Target_ is estimated to have a positive and statistically significant impact on both total employment and total number of firms across all distance buffers. For both outcome variables, the coefficient on the interactive term _Distance X Target_ is estimated to be negative and significant, suggesting the impact of the New Industrial Policy measured at the border declines with distance from the border.

# **Table 3. Average effects of the New Industrial Policy** **<u>(2013, town and village level)</u>**

||||Log (employm<br>|ent)<br>||||
|---|---|---|---|---|---|---|---|
||(1)<br>40 kms|(2)<br>50 kms|(3)<br>60 kms|(4)<br>70 kms|(5)<br>80 kms|(6)<br>90 kms|(7)<br>100 kms|
|_Target_|0.8200<sup>***</sup>|0.8755<sup>***</sup>|0.9759<sup>***</sup>|1.0315<sup>***</sup>|1.0612<sup>***</sup>|1.0709<sup>***</sup>|1.0771<sup>***</sup>|
||(7.44)|(8.95)|(10.91)|(12.66)|(14.18)|(15.16)|(16.00)|
|_Distance_<br>_Distance X Target_|-0.0021<br>(-0.95)<br>-0.0018|-0.0021<br>(-1.29)<br>-0.0063|-0.0011<br>(-0.86)<br>-0.0125<sup>***</sup>|-0.0004<br>(-0.43)<br>-0.0155<sup>***</sup>|-0.0000<br>(-0.06)<br>-0.0170<sup>***</sup>|0.0004<br>(0.66)<br>-0.0172<sup>***</sup>|0.0012<sup>*</sup><br>(2.14)<br>-0.0169<sup>***</sup>|
|_Constant_|(-0.35)<br>2.9018<sup>***</sup><br>(47.74)|(-1.65)<br>2.9021<sup>***</sup><br>(54.79)|(-4.16)<br>2.8781<sup>***</sup><br>(61.09)|(-6.81)<br>2.8597<sup>***</sup><br>(68.24)|(-10.06)<br>2.8491<sup>***</sup><br>(75.35)|(-12.75)<br>2.8334<sup>***</sup><br>(80.77)|(-15.20)<br>2.8065<sup>***</sup><br>(86.18)|
|_No. of observations_|3652|4521|5228|5988|6859|7644|8505|
||||Log (total fir|ms)||||
||(1)<br>40 kms|(2)<br>50 kms|(3)<br>60 kms|(4)<br>70 kms|(5)<br>80 kms|(6)<br>90 kms|(7)<br>100 kms|
|_Target_|0.3831<sup>***</sup><br>(4.56)|0.4317<sup>***</sup><br>(5.78)|0.5127<sup>***</sup><br>(7.49)|0.5474<sup>***</sup><br>(8.80)|0.5800<sup>***</sup><br>(10.19)|0.5805<sup>***</sup><br>(10.80)|0.5867<sup>***</sup><br>(11.45)|
|_Distance_|-0.0007|-0.0011|-0.0003|0.0001|0.0004|0.0005|0.0011<sup>*</sup>|
||(-0.38)|(-0.80)|(-0.29)|(0.10)|(0.68)|(0.92)|(2.38)|
|_Distance X Target_|-0.0009<br>(-0.22)|-0.0049<br>(-1.65)|-0.0100<sup>***</sup><br>(-4.20)|-0.0119<sup>***</sup><br>(-6.62)|-0.0135<sup>***</sup><br>(-10.37)|-0.0135<sup>***</sup><br>(-13.13)|-0.0134<sup>***</sup><br>(-15.91)|
|_Constant_|<br>0.8824<sup>***</sup>|<br>0.8893<sup>***</sup>|<br>0.8715<sup>***</sup>|<br>0.8606<sup>***</sup>|<br>0.8507<sup>***</sup>|<br>0.8486<sup>***</sup>|<br>0.8282<sup>***</sup>|
||(18.06)|(20.78)|(22.78)|(25.26)|(27.65)|(29.69)|(31.28)|
|_No. of observations_|3652|4521|5228|5988|6859|7644|8505|

_Note:_ All standard errors are heteroskedastic robust. _t_ statistics in parentheses.<sup>*</sup> _p_ < 0.05,<sup>**</sup> _p_ < 0.01,<sup>***</sup> _p_ < 0.001.

Overall, the results in Table 3 show that the New Industrial Policy had a significant local effect on employment and businesses. According to the point estimation, for places within 40 kilometers from the border, there was an 82 percent increase in total employment when one crosses the border from Uttar Pradesh to Uttarakhand. In terms of total firms, the point estimation suggests a 39 percent increase, which

> 12 For all specifications, clustering standard errors at the subdistrict level does not affect our main results and conclusions. The additional results with clustered standard errors are available upon request.

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