IDEAS home Printed from https://ideas.repec.org/a/sae/prodev/v2y2002i4p306-324.html
   My bibliography  Save this article

Determinants of long-term growth in India: a Keynesian approach

Author

Listed:
  • Sushanta K. Mallick

    (The Royal Institute of International Affairs, London, UK, smallick@riia.org)

Abstract

This paper attempts an eclectic synthesis on long-term growth, which integrates two standard models - the neoclassical model with the endogenous growth and export-led model of growth. A vector autoregressive (VAR) model has been used for India from 1950 to 1995 using Johansen’s multivariate cointegration approach to derive latent equilibrium relationships, and the short-run error correction equations are then estimated. Two cointegrating relationships for real output and real private investment, respectively, were found. Output is determined by private investment, human capital, real interest rate and public investment. Private investment is driven by public investment, domestic credit to the private sector, real interest rate and human capital. This seems to support a McKinnon-Shaw model in the long run and a Keynesian/Structuralist view in the short run. The long-run model also validates the hypothesis that growth has not been export-led in India, rather it is growth-driven exports.

Suggested Citation

  • Sushanta K. Mallick, 2002. "Determinants of long-term growth in India: a Keynesian approach," Progress in Development Studies, , vol. 2(4), pages 306-324, October.
    • Handle: RePEc:sae:prodev:v:2:y:2002:i:4:p:306-324
    DOI: 10.1191/1464993402ps043ra
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1191/1464993402ps043ra
    Download Restriction: no
    File URL: https://libkey.io/10.1191/1464993402ps043ra?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Levin, Andrew & Raut, Lakshmi K, 1997. "Complementarities between Exports and Human Capital in Economic Growth: Evidence from the Semi-industrialized Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 46(1), pages 155-174, October.
    3. Heller, Peter S. & Porter, Richard C., 1978. "Exports and growth : An empirical re-investigation," Journal of Development Economics, Elsevier, vol. 5(2), pages 191-193, June.
    4. Thomas I. Palley, 1996. "Post Keynesian Economics," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37412-6.
    5. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    6. Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
    7. Thomas I. Palley, 1997. "Aggregate Demand and Endogenous Growth: a Generalized Keynes-Kaldor Model of Economic Growth," Metroeconomica, Wiley Blackwell, vol. 48(2), pages 161-176, June.
    8. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    9. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    10. Tyler, William G., 1981. "Growth and export expansion in developing countries : Some empirical evidence," Journal of Development Economics, Elsevier, vol. 9(1), pages 121-130, August.
    11. Perron, Pierre, 1988. "Trends and random walks in macroeconomic time series : Further evidence from a new approach," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 297-332.
    12. Michaely, Michael, 1977. "Exports and growth : An empirical investigation," Journal of Development Economics, Elsevier, vol. 4(1), pages 49-53, February.
    13. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    14. Sushanta Mallick, 2001. "Dynamics of Macroeconomic Adjustment with Growth: Some Simulation Results," International Economic Journal, Taylor & Francis Journals, vol. 15(1), pages 115-139.
    15. Bacha, Edmar L., 1990. "A three-gap model of foreign transfers and the GDP growth rate in developing countries," Journal of Development Economics, Elsevier, vol. 32(2), pages 279-296, April.
    16. Irene Henriques & Perry Sadorsky, 1996. "Export-Led Growth or Growth-Driven Exports? The Canadian Case," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 540-555, August.
    17. Subrata Ghatak & Stephen Price, 1997. "Export composition and economic growth: Cointegration and causality evidence for India," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(3), pages 538-553, September.
    18. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    19. Arestis, Philip & Demetriades, Panicos O, 1997. "Financial Development and Economic Growth: Assessing the Evidence," Economic Journal, Royal Economic Society, vol. 107(442), pages 783-799, May.
    20. Jung, Woo S. & Marshall, Peyton J., 1985. "Exports, growth and causality in developing countries," Journal of Development Economics, Elsevier, vol. 18(1), pages 1-12.
    21. Ram, Rati, 1985. "Exports and Economic Growth: Some Additional Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 415-425, January.
    22. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    23. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    24. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    25. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    26. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    27. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
    28. Bahmani-Oskooee, Mohsen & Mohtadi, Hamid & Shabsigh, Ghiath, 1991. "Exports, growth and causality in LDCs : A re-examination," Journal of Development Economics, Elsevier, vol. 36(2), pages 405-415, October.
    29. Thomas I. Palley, 1996. "Growth Theory in a Keynesian Mode: Some Keynesian Foundations for New Endogenous Growth Theory," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 19(1), pages 113-135, September.
    30. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sushil Kumar Haldar, 2009. "Economic Growth in India Revisited," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(1), pages 105-126, January.
    2. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2017. "Public and private investment and economic growth in South Africa:An empirical investigation," Working Papers 22005, University of South Africa, Department of Economics.
    3. Makuyana, Garikai & Odhiambo, Nicholas M., 2017. "Public and private investment and economic growth in Zimbabwe: An empirical test," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(1).
    4. Biru Paksha Paul & Anupam Das, 2012. "Export-led Growth in India and the Role of Liberalisation," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(1), pages 1-26, February.
    5. MAKUYANA, Garikai & ODHIAMBO, Nicholas M., 2018. "Public and Private Investment and Economic Growth in Zambia: A Dynamic Approach," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 503-526.
    6. Eckehard Rosenbaum & Biagio Ciuffo, 2017. "Sustainability via Intergenerational Transfers in a Stock-Flow-Consistent Model," Metroeconomica, Wiley Blackwell, vol. 68(1), pages 147-184, February.
    7. Nishija Unnikrishnan & Thomas Paul Kattookaran, 2020. "Impact of Public and Private Infrastructure Investment on Economic Growth: Evidence from India," Journal of Infrastructure Development, India Development Foundation, vol. 12(2), pages 119-138, December.
    8. Sushanta Mallick, 2006. "Policy instruments to avoid output collapse: an optimal control model for India," Applied Financial Economics, Taylor & Francis Journals, vol. 16(10), pages 761-776.
    9. Biswajit Maitra, 2020. "Exploring Import-led Growth in India: Evidence from the Post-reform Period," South Asian Journal of Macroeconomics and Public Finance, , vol. 9(1), pages 87-113, June.
    10. Anh Tru Nguyen, 2018. "The Relationship among Economic Growth, Trade, Unemployment, and Inflation in South Asia: A Vector Autoregressive Model Approach," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 5(2), pages 165-172.
    11. Garikai Makuyana & Nicholas M. Odhiambo, 2019. "Public and private investment and economic growth in Malawi: an ARDL-bounds testing approach," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 673-689, January.
    12. P. J. Dawson, 2005. "The export-income relationship: the case of India," Progress in Development Studies, , vol. 5(1), pages 16-29, January.
    13. Vatthanamixay Chansomphou & Masaru Ichihashi, 2011. "Foreign aid, foreign direct investment and economic growth of Lao PDR," IDEC DP2 Series 1-2, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    14. Bozhechkova, A.V. (Божечкова, А.В.) & Sinelnikova-Muryleva, Elena Vladimirovna (Синельникова-Мурылева, Елена Владимировна), 2016. "The Impact of Higher Interest Rates on Loans to the Economic Growth of the Russian Federation in the Current Environment [Влияние Высоких Процентных Ставок По Заимствованиям На Экономический Рост Р," Working Papers 21310, Russian Presidential Academy of National Economy and Public Administration.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sayef Bakari, 2017. "The Impact of Vegetables Exports on Economic Growth in Tunisia," Economic Research Guardian, Weissberg Publishing, vol. 7(2), pages 72-87, December.
    2. Sushil Kumar Haldar, 2009. "Economic Growth in India Revisited," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(1), pages 105-126, January.
    3. Abhijit Sharma & Theodore Panagiotidis, 2003. "An Analysis of Exports and Growth in India: Some Empirical Evidence (1971-2001)," Working Papers 2003004, The University of Sheffield, Department of Economics, revised Nov 2003.
    4. Yifru, Tigist, 2015. "Impact of Agricultural Exports on Economic Growth in Ethiopia: The Case of Coffee, Oilseed and Pulses," Research Theses 243473, Collaborative Masters Program in Agricultural and Applied Economics.
    5. Yifru, Tigist, 2015. "Impact Of Agricultural Exports On Economic Growth In Ethiopia: The Case Of Coffee, Oilseed And Pulses," Research Theses 265676, Collaborative Masters Program in Agricultural and Applied Economics.
    6. Adeel Saleem & Maqbool H. Sial & Ahmed Raza Cheema, 2023. "Does an asymmetric nexus exist between exports and economic growth in Pakistan? Recent evidence from a nonlinear ARDL approach," Economic Change and Restructuring, Springer, vol. 56(1), pages 297-326, February.
    7. Sayef Bakari, 2017. "The Three-Way Linkages Between Export, Import And Economic Growth: New Evidence From Tunisia," Journal of Smart Economic Growth, , vol. 2(3), pages 13-53, December.
    8. Jim Love & Ramesh Chandra, 2004. "Testing Export‐Led Growth in India, Pakistan and Sri Lanka Using a Multivariate Framework," Manchester School, University of Manchester, vol. 72(4), pages 483-496, July.
    9. M.A.B. Siddique & E.A. Selvanathan, 1998. "Export Performance and Economic Development in Thailand," Economics Discussion / Working Papers 98-24, The University of Western Australia, Department of Economics.
    10. Musleh-Ud Din, 2004. "Exports, Imports, and Economic Growth in South Asia: Evidence Using a Multivariate Time-series Framework," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(2), pages 105-124.
    11. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    12. Kar Muhsin & Peker Osman & Kaplan Muhittin, 2008. "Trade Liberalization, Financial Development and Economic Growth in The Long Term: The Case of Turkey," South East European Journal of Economics and Business, Sciendo, vol. 3(2), pages 25-38, November.
    13. Christian Dreger & Dierk Herzer, 2013. "A further examination of the export-led growth hypothesis," Empirical Economics, Springer, vol. 45(1), pages 39-60, August.
    14. Ahmed, Osama & Sallam, Walid, 2018. "Studying the volatility effect of agricultural exports on agriculture share of GDP: The case of Egypt," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(8), pages 345-352.
    15. Abo-Zaid Salem M, 2011. "The Trade-Growth Relationship in Israel Revisited: Evidence from Annual Data, 1960-2004," Review of Middle East Economics and Finance, De Gruyter, vol. 6(3), pages 63-93, February.
    16. Turan Subasat, 2003. "Does the Dollar Index Really Measure Outward Orientation?," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 309-326.
    17. Bakari, Sayef, 2017. "Why is South Africa Still a Developing Country?," MPRA Paper 80763, University Library of Munich, Germany.
    18. Renelt, David, 1991. "Economic growth : a review of the theoretical and empirical literature," Policy Research Working Paper Series 678, The World Bank.
    19. Ana María Cuadros Ramos, 2000. "Exportaciones y crecimiento económico: Un análisis de causalidad para México," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 15(1), pages 37-64.
    20. Alper Aslan & Ebru Topcu, 2018. "The Relationship between Export and Growth: Panel Data Evidence from Turkish Sectors," Economies, MDPI, vol. 6(2), pages 1-15, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:prodev:v:2:y:2002:i:4:p:306-324. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.