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The Relationship between the Growth of Exports and Growth of Gross Domestic Product of India

Received: 11 June 2014     Accepted: 24 June 2014     Published: 30 June 2014
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Abstract

Does Economic Growth Promote Exports of a country or do exports lead to a higher growth? This paper tries to answer this question in the context of India, using a three step procedure of first conducting a Vector Auto Regression (VAR) analysis followed by a Granger Causality Test and an Impulse Response Function. Taking yearly data from 1969-2012, we find that growth of exports depends positively on growth of GDP with a year lag. Robustness checks show consistent VAR Results. Further the Granger Causality Test determines that GDP Growth causes Export growth in India. Finally Impulse Response Functions generated show that there are much higher responses of export through a change in GDP. So unanimously we find that India backs the theory of Growth Led Exports.

Published in International Journal of Business and Economics Research (Volume 3, Issue 3)
DOI 10.11648/j.ijber.20140303.13
Page(s) 135-139
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Exports of India, Growth Led Exports, Vector Auto Regression, Granger Causality, Impulse Response Functions

References
[1] Dalia Marin (1992), “Is the Export-Led Growth Hypothesis Valid for Industrialized Countries?” The Review of Economics and Statistics, Vol.74, No. 4 (November, 1992), pp.678-688.
[2] Dhawan, U., and B. Biswal (1999), ‘Re-examining Export Led Growth Hypo-thesis: a Multivariate Cointegration analysis for India’, Applied Economics, 31: 525-30.
[3] Dickey, D. A. and W. A. Fuller (1979), ‘Distribution of the Estimators for Autore-gressive Time Series with a Unit Root’, Journal of the American Statistical Association, 74: 427-31.
[4] Dodaro, S. (1993), ‘Comparative Advantage, Trade and Growth: Export-Led Growth Revisited’, World Development, 19(9): 1153-65.
[5] Granger, C. W. J. (1969), ‘Investi-gating Causal Relations by Econometric Models and Cross-Spectral Methods’, Econometrica, 37: 424-38.
[6] Jung, W. S., and P. J. Marshall (1985), ‘Exports, Growth and Causality in Develop-ing Countries’, Journal of Development Economics, 18: 1-12.
[7] Kaldor N (1967), “Strategic Factors in Economic Development”, New York State School of Industrial and Labor Relations, Ithaca, Cornell University, New York.
[8] Krugman P R (1984), “Import Protection as Export Promotion”, in H Kierzkowski (Ed.), Monopolistic Competition in International Trade, Oxford Uni-versity Press, Oxford.
[9] Mallick, S. K. (1996), Causality between exports and economic growth in India: Evidence from Cointegration based Error-Correction Model, Indian Journal of Economics, 76 (302), 307-320.
[10] Mishra, P. K. (2011) : The dynamics of relationship between exports and economic growth in India, International Journal of Economic Sciences and Applied Research, ISSN 1791-3373, Vol. 4, Iss. 2, pp. 53-70.
[11] Nain, Md. Zulquar ;Ahmad, Wasim, “Export-led Hypothesis in Indian : Some Further Evidences IUP Journal of Monetary Economics, Aug 01, 2010; Vol. 8, No. 3, p. 69-82
[12] Narayan Chandra Pradhan (2010), Reserve Bank of India Occupational papers. Vol. 31, No.3.
[13] Nidugala, G K. (2001), ‘Exports and Economic Growth in India: An Empirical Investigation’, Indian Economic Journal, 47(3): 67-78.
[14] R, Werner Kristjanpoller; Olson, Josephine E. “Economic Growth in Latin American Countries: Is it Based on Export-Led or Import-Led Growth?” Emerging Markets Finance & Trade, Jan 02, 2014; Vol. 50, p. 6-20
[15] Walter Enders, Applied Econometric Time Series, 3rd Edi-tion.
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  • APA Style

    Mukherji Ronit, Pandey Divya. (2014). The Relationship between the Growth of Exports and Growth of Gross Domestic Product of India. International Journal of Business and Economics Research, 3(3), 135-139. https://doi.org/10.11648/j.ijber.20140303.13

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    ACS Style

    Mukherji Ronit; Pandey Divya. The Relationship between the Growth of Exports and Growth of Gross Domestic Product of India. Int. J. Bus. Econ. Res. 2014, 3(3), 135-139. doi: 10.11648/j.ijber.20140303.13

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    AMA Style

    Mukherji Ronit, Pandey Divya. The Relationship between the Growth of Exports and Growth of Gross Domestic Product of India. Int J Bus Econ Res. 2014;3(3):135-139. doi: 10.11648/j.ijber.20140303.13

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  • @article{10.11648/j.ijber.20140303.13,
      author = {Mukherji Ronit and Pandey Divya},
      title = {The Relationship between the Growth of Exports and Growth of Gross Domestic Product of India},
      journal = {International Journal of Business and Economics Research},
      volume = {3},
      number = {3},
      pages = {135-139},
      doi = {10.11648/j.ijber.20140303.13},
      url = {https://doi.org/10.11648/j.ijber.20140303.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20140303.13},
      abstract = {Does Economic Growth Promote Exports of a country or do exports lead to a higher growth? This paper tries to answer this question in the context of India, using a three step procedure of first conducting a Vector Auto Regression (VAR) analysis followed by a Granger Causality Test and an Impulse Response Function. Taking yearly data from 1969-2012, we find that growth of exports depends positively on growth of GDP with a year lag. Robustness checks show consistent VAR Results. Further the Granger Causality Test determines that GDP Growth causes Export growth in India. Finally Impulse Response Functions generated show that there are much higher responses of export through a change in GDP. So unanimously we find that India backs the theory of Growth Led Exports.},
     year = {2014}
    }
    

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Author Information
  • M.Sc Economics, University Of Warwick, Coventry, United Kingdom

  • M.Sc Economics and International Financial Economics, University of Warwick, Coventry, United Kingdom

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