Export Growth in India: Has FDI Played a Role
AbstractExport growth in India has been much faster than GDP growth over the past few decades. Several factors appear to have contributed to this phenomenon including foreign direct investment (FDI). However, despite increasing inflows of FDI especially in recent years there has not been any attempt to assess its contribution to India's export performance- one of the channels through which FDI influences growth. Using annual data for 1970-98 we investigate the determinants of export performance in India in a simultaneous equation framework. Results suggest that demand for Indian exports increases when its export prices fall in relation to world prices. Furthermore, the real appreciation of the rupee adversely effects India's exports. Export supply is positively related to the domestic relative price of exports and higher domestic demand reduces export supply. Foreign investment appears to have statistically no significant impact on export performance although the coefficient of FDI has a positive sign.
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Bibliographic InfoPaper provided by Economic Growth Center, Yale University in its series Working Papers with number 816.
Length: 21 pages
Date of creation: Jul 2000
Date of revision:
Exports; commercial policy; export subsidies; foreign direct investment; exchange rates and India.;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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