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Export Growth in India: Has FDI Played a Role

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  • Kishor Sharma
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    Abstract

    Export 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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    File URL: http://www.econ.yale.edu/growth_pdf/cdp816.pdf
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    Bibliographic Info

    Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 816.

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    Length: 21 pages
    Date of creation: Jul 2000
    Date of revision:
    Handle: RePEc:egc:wpaper:816

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    Related research

    Keywords: Exports; commercial policy; export subsidies; foreign direct investment; exchange rates and India.;

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    References

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    1. V N Balasubramanyam & M Salisu & David Sapsford., . "Foreign Direct Investment and Growth in EP and IS Countries," Working Papers ec18/94, Department of Economics, University of Lancaster.
    2. Brahmbhatt, Milan & Srinivasan, T.G. & Murrell, Kim, 1996. "India in the global economy," Policy Research Working Paper Series 1681, The World Bank.
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    Citations

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    Cited by:
    1. Lane, Philip R. & Schmukler, Sergio L., 2007. "The international financial integration of China and India," Policy Research Working Paper Series 4132, The World Bank.
    2. Ramesh C. Paudel, 2014. "Liberalisation reform and export performance of India," ASARC Working Papers 2014-03, The Australian National University, Australia South Asia Research Centre.
    3. Gu, Weishi & Awokuse, Titus O. & Yuan, Yan, 2008. "The Contribution of Foreign Direct Investment to China's Export Performance: Evidence from Disaggregated Sectors," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6453, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Kolawole Olayiwola & Henry Okodua, 2013. "Foreign Direct Investment, Non-Oil Exports, and Economic Growth in Nigeria: A Causality Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(11), pages 1479-1496, November.
    5. Priya Ranjan & Jibonayan Raychaudhuri, 2011. "Self-selection vs learning: evidence from Indian exporting firms," Indian Growth and Development Review, Emerald Group Publishing, vol. 4(1), pages 22-37, April.
    6. Abdullahi Ahmed & Enjiang Cheng & George Messinis, 2011. "The role of exports, FDI and imports in development: evidence from Sub-Saharan African countries," Applied Economics, Taylor & Francis Journals, vol. 43(26), pages 3719-3731.
    7. Alexander Cobham, . "Capital Account Liberalisation and Poverty," QEH Working Papers qehwps70, Queen Elizabeth House, University of Oxford.
    8. David Mayer Foulkes., 2007. "Subdesarrollo y globalización," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 155-192, May.
    9. Guisan, M.C. & Exposito, P., 2006. "Production by sector in China, India and OECD Countries, 1985-2005," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(2).
    10. Muhammad Tariq Majeed & Eatzaz Ahmad, 2006. "Determinants of Exports in Developing Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 1265-1276.
    11. Yeboah, Osei-Agyeman & Naanwaab, Cephas & Saleem, Shaik & Akuffo, Akua S., 2012. "Effects of Trade Openness on Economic Growth: The Case of African Countries," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119795, Southern Agricultural Economics Association.

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