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Does onslaught of globalisation induce pro-efficient government expenditures in a large transitioning economy? Empirical evidence from India

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  • Hrushikesh Mallick

    (Centre for Development Studies (CDS))

Abstract

The study attempts to investigate the effects of globalisation on components of general government expenditures and domestic private investment in India during 1980–1981 to 2019–2020, by controlling their other crucial determinants. We observe a positive impact of FDI, per capita income and population growth on both government current and capital expenditures, while FRBM dummy has a strong favourable impact only on capital expenditure. This indicates significant influence of demand side factors on both components of government expenditure along with a favourable effect of fiscal discipline measures on capital expenditure. On exploring the effects of government capital spending and FDI on domestic private investment, we observe government capital spending has a negative effect, while FDI, revenue spending and fiscal discipline measures have positive effects. Thus, we conclude that in response to globalisation while general government in India is augmenting with both pro-efficient and welfare spending measures, its overall fiscal policy does not provide a strong stimulus to domestic private investment.

Suggested Citation

  • Hrushikesh Mallick, 2024. "Does onslaught of globalisation induce pro-efficient government expenditures in a large transitioning economy? Empirical evidence from India," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-46, April.
    • Handle: RePEc:kap:ecopln:v:57:y:2024:i:2:d:10.1007_s10644-024-09649-2
    DOI: 10.1007/s10644-024-09649-2
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    More about this item

    Keywords

    Government expenditures; Private domestic investment; FDI; Population growth; Per capita income growth;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H4 - Public Economics - - Publicly Provided Goods
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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