IDEAS home Printed from https://ideas.repec.org/a/spr/futbus/v6y2020i1d10.1186_s43093-020-00023-y.html
   My bibliography  Save this article

Effects of dynamic variables on industrial output in one of the world’s fastest-growing countries: case evidence from India

Author

Listed:
  • A. Sankaran

    (Pondicherry Central University)

  • A. Vadivel

    (Arignar Anna College)

  • M. Abdul Jamal

    (University of Madras)

Abstract

Increase in industrial output is an important indicator to identify the socio-economic development of a nation. India is one of the fastest-growing economies in the world; using its comparative advantage and capitalizing its educated youths, it tries to be as a hub of manufacturing in the world map. Under these circumstances, the present study attempts to identify the effects of dynamic macroeconomic variables on manufacturing output in India using secondary data from 1990Q1 to 2017Q4 sourced from the World Bank, and IMF, RBI, ASI and published materials are other source of information. This study considered variables such as industrial production, population, agricultural output, exchange rate, export, oil price, and gross fixed capital formation. We employed ADF and PP unit root tests, Johansen co-integration test, and error correction model based on Granger causality test. This study found that manufacturing output was driven by agricultural output, export and population. The chief role played by the agricultural output in affecting the manufacturing output suggested that the agricultural sector is still serving as engine of economic development in general and manufacturing output in particular in the case of fast-growing Indian economy. Further, investment on education, health, trainings and other capacity building in the form of human capital on population will lead the industrial sector to get strengthened through observing entrepreneurial spirit, high skilled labours, technicians, and managers. Finally, it is suggested that the superior focus on tapping the potential market on the planet, research and development, mechanization, proper quality control, skill development, better management, and effective marketing will give a new life to the manufacturing sector of the fast-growing Indian economy.

Suggested Citation

  • A. Sankaran & A. Vadivel & M. Abdul Jamal, 2020. "Effects of dynamic variables on industrial output in one of the world’s fastest-growing countries: case evidence from India," Future Business Journal, Springer, vol. 6(1), pages 1-8, December.
    • Handle: RePEc:spr:futbus:v:6:y:2020:i:1:d:10.1186_s43093-020-00023-y
    DOI: 10.1186/s43093-020-00023-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s43093-020-00023-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1186/s43093-020-00023-y?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. K. A. Al Mamun & H. K. Nath, 2005. "Export-led growth in Bangladesh: a time series analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 12(6), pages 361-364.
    3. Patricia McGrath, 2006. "Financial Deregulation and Industrial Development: Subsequent Impact on Economic Growth in the Czech Republic, Hungary and Poland," William Davidson Institute Working Papers Series 818, William Davidson Institute at the University of Michigan.
    4. Rangarajan, C., 1982. "Agricultural growth and industrial performance in India:," Research reports 33, International Food Policy Research Institute (IFPRI).
    5. Burger, Anže & Damijan, Jože P. & Kostevc, Črt & Rojec, Matija, 2017. "Determinants of firm performance and growth during economic recession: The case of Central and Eastern European countries," Economic Systems, Elsevier, vol. 41(4), pages 569-590.
    6. Patricia Mc Grath, 2006. "Financial Deregulation and Financial Development, and Subsequent Impact on Economic Growth in the Czech Republic, Hungary and Poland," William Davidson Institute Working Papers Series wp828, William Davidson Institute at the University of Michigan.
    7. Charles R. Hulten & Esra Bennathan & Sylaja Srinivasan, 2006. "Infrastructure, Externalities, and Economic Development: A Study of the Indian Manufacturing Industry," The World Bank Economic Review, World Bank, vol. 20(2), pages 291-308.
    8. Gregory Tassey, 2010. "Rationales and mechanisms for revitalizing US manufacturing R&D strategies," The Journal of Technology Transfer, Springer, vol. 35(3), pages 283-333, June.
    9. Heshmati, Almas & Rashidghalam, Masoomeh, 2016. "Labour Productivity in Kenyan Manufacturing and Service Industries," IZA Discussion Papers 9923, Institute of Labor Economics (IZA).
    10. Vogel, Stephen J, 1994. "Structural Changes in Agriculture: Production Linkages and Agricultural Demand-Led Industrialization," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 136-156, January.
    11. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May.
    12. Szirmai, Adam, 2012. "Industrialisation as an engine of growth in developing countries, 1950–2005," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 406-420.
    13. Dani Rodrik, 2009. "Growth after the Crisis," World Bank Publications - Books, The World Bank Group, number 27937, December.
    14. John Cornwall, 1970. "The Role of Demand and Investment in Long-Term Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(1), pages 48-69.
    15. 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.
    16. Mohsen Mehrara & Mehdi Sarem, 2009. "Effects of oil price shocks on industrial production: evidence from some oil-exporting countries," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 33(3-4), pages 170-183, September.
    17. Lee, Kiseok & Ni, Shawn, 2002. "On the dynamic effects of oil price shocks: a study using industry level data," Journal of Monetary Economics, Elsevier, vol. 49(4), pages 823-852, May.
    18. Sankaran, A. & Rajkumar, P., 2014. "The Dimensions of Industrial Growth in Tamil Nadu, India: Three Decades of Experience," Asian Business Review, Asian Business Consortium, vol. 4(1), pages 19-23.
    19. Jiranyakul, Komain, 2006. "The Impact of International Oil Prices on Industrial Production: The Case of Thailand," MPRA Paper 47035, University Library of Munich, Germany.
    20. Lance J. Taylor, 1969. "Development Patterns: A Simulation Study," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(2), pages 220-241.
    21. Olorunfemi Sola & Tomola M. Obamuyi & Felix O. Adekunjo & E.O Ogunleye, 2013. "Manufacturing Performance in Nigeria: Implication for Sustainable Development," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(9), pages 1195-1213, September.
    22. Hwa, Erh-Cheng, 1988. "The contribution of agriculture to economic growth: Some empirical evidence," World Development, Elsevier, vol. 16(11), pages 1329-1339, November.
    23. Olorunfemi Sola & Tomola M Obamuyi & Felix O Adekunjo & E.O Ogunleye, 2013. "Manufacturing Performance in Nigeria: Implication for Sustainable Development," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(9), pages 1195-1213.
    24. Jojo Jacob, 2005. "Late Industrialization and Structural Change: Indonesia, 1975-2000," Oxford Development Studies, Taylor & Francis Journals, vol. 33(3-4), pages 427-451.
    25. Taegi Kim & Changsuh Park, 2006. "Productivity growth in Korea: efficiency improvement or technical progress?," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 943-954.
    26. Shahidul Islam & S.T. Syed Shazali, 2011. "Determinants of manufacturing productivity: pilot study on labor‐intensive industries," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 60(6), pages 567-582, July.
    27. Chenery, Hollis B, 1980. "Interactions between Industrialization and Exports," American Economic Review, American Economic Association, vol. 70(2), pages 281-287, May.
    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. Riya Sureka & Satish Kumar & Deepraj Mukherjee & Christina Theodoraki, 2023. "What restricts SMEs from adopting sophisticated capital budgeting practices?," Small Business Economics, Springer, vol. 60(1), pages 265-290, January.

    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. Adel Mohsen & Soo Chua & Che Sab, 2015. "Determinants of industrial output in Syria," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-12, December.
    2. Richard Tiffin & Xavier Irz, 2006. "Is agriculture the engine of growth?," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 79-89, July.
    3. Y lmaz BAYAR & Cuneyt KILIC, 2014. "Effects of Oil and Natural Gas Prices on Industrial Production in the Eurozone Member Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 4(2), pages 238-247.
    4. 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.
    5. Czujack, Corinna & Flôres Junior, Renato Galvão & Ginsburgh, Victor, 1995. "On long-run price comovements between paintings and prints," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 269, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    6. Yap, Wei Yim & Lam, Jasmine S.L., 2006. "Competition dynamics between container ports in East Asia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 35-51, January.
    7. Ely, David & Salehizadeh, Mehdi, 2001. "American depositary receipts: An analysis of international stock price movements," International Review of Financial Analysis, Elsevier, vol. 10(4), pages 343-363.
    8. Abbas Alavirad & Sanhita Athawale, 2005. "The impact of the budget deficit on inflation in the Islamic Republic of Iran," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 29(1), pages 37-49, March.
    9. Edward Ghartey, 2006. "Exchange Pressure, Sterilized Intervention and Monetary Policy in Ghana," EcoMod2006 272100031, EcoMod.
    10. Muhammad Shahbaz & Qazi Muhammad Adnan Hye & Muhammad Shahbaz Shabbir, 2013. "Does Corruption Increase Financial Development? A Time Series Analysis in Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 1(10), pages 113-124, October.
    11. La, Le & Mei, Bin, 2015. "Portfolio diversification through timber real estate investment trusts: A cointegration analysis," Forest Policy and Economics, Elsevier, vol. 50(C), pages 269-274.
    12. Frank Asche, 2001. "Testing the effect of an anti-dumping duty: The US salmon market," Empirical Economics, Springer, vol. 26(2), pages 343-355.
    13. Ansgar Belke & Robert Czudaj, 2010. "Is Euro Area Money Demand (Still) Stable? Cointegrated VAR Versus Single Equation Techniques," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(4), pages 285-315.
    14. Saten Kumar & Don J. Webber & Geoff Perry, 2012. "Real wages, inflation and labour productivity in Australia," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 2945-2954, August.
    15. Wang, Peijie & Brand, Steven, 2015. "A new approach to estimating value–income ratios with income growth and time-varying yields," European Journal of Operational Research, Elsevier, vol. 242(1), pages 182-187.
    16. Ramona Dumitriu & Razvan Stefanescu, 2015. "The Relationship Between Romanian Exports And Economic Growth After The Adhesion To European Union," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 17-26.
    17. Mr. Emilio Sacerdoti & Mr. Yuan Xiao, 2001. "Inflation Dynamics in Madagascar, 1971-2000," IMF Working Papers 2001/168, International Monetary Fund.
    18. Muhammad Shahbaz & Pervaz Azim & Khalil Ahmad, 2011. "Exports-Led Growth Hypothesis in Pakistan: Further Evidence," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 182-197.
    19. Garg, Bhavesh & Prabheesh, K.P., 2021. "Testing the intertemporal sustainability of current account in the presence of endogenous structural breaks: Evidence from the top deficit countries," Economic Modelling, Elsevier, vol. 97(C), pages 365-379.
    20. Ericsson, Neil R & Hendry, David F & Mizon, Grayham E, 1998. "Exogeneity, Cointegration, and Economic Policy Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(4), pages 370-387, October.

    More about this item

    Keywords

    Causality; Indian industries; Long-run relationship; Manufacturing output; New industrial policy;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    Statistics

    Access and download statistics

    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:spr:futbus:v:6:y:2020:i:1:d:10.1186_s43093-020-00023-y. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.