How to Set the Install Location of your App

android:installLocation was added in API Level 8
Allows your app to be installed on external storage. If android:installLocation is not included, your app be installed internally only, and not movable.
1. In the AndroidManifest.xml file, add the below line between the <manifest> tags. This will set the application to automatically install on external storage, if available. 

<manifest
    ...
     android:installLocation="preferExternal"
</manifest>

2. Compile and run!

3. All optional settings:

preferExternal: you request that your application be installed on the external storage, but the system does not guarantee that your application will be installed on the external storage. If the external storage is full, the system will install it on the internal storage. The user can also move your application between the two locations.

auto: you indicate that your application may be installed on the external storage, but you don't have a preference of install location. The system will decide where to install your application based on several factors. The user can also move your application between the two locations.
internalOnly: the application must be installed on the internal device storage only. If this is set, the application will never be installed on the external storage. If the internal storage is full, then the system will not install the application. This is also the default behavior if you do not define android:installLocation.

4. When an application is installed on the external storage:

* The .apk file is saved to the external storage, but any application data (such as databases) is still saved on the internal device memory.
* The container in which the .apk file is saved is encrypted with a key that allows the application to operate only on the device that installed it. (A user cannot transfer the SD card to another device and use applications installed on the card.) Though, multiple SD cards can be used with the same device.
* At the user's request, the application can be moved to the internal storage.

Resources: http://developer.android.com/guide/topics/data/install-location.html
http://developer.android.com/guide/topics/manifest/manifest-element.html