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Export Growth in India: Has FDI Played a Role?

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Author Info

  • Sharma, K.

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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Bibliographic Info

Paper provided by Yale - Economic Growth Center in its series Papers with number 816.

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Length: 21 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:fth:yalegr:816

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Postal: U.S.A.; YALE UNIVERSITY, ECONOMIC GROWTH CENTER, YALE STATION NEW-HAVEN CONNECTICUT 06520 U.S.A
Phone: (203) 432-3610
Fax: (203) 432-3898
Web page: http://www.econ.yale.edu/~egcenter/
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Keywords: EXPORTS ; COMMERCIAL POLICY ; INVESTMENTS ; EXCHANGE RATE;

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Citations

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Cited by:
  1. 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.
  2. Sahu, Santosh Kumar & Narayanan, K., 2013. "Exports and Participation in Clean Development Mechanism [CDM] in Technology Intensive Industries in India," MPRA Paper 50745, University Library of Munich, Germany.
  3. 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.
  4. Nora Dihel & Felix Eschenbach & Ben Shepherd, 2006. "South-South Services Trade," OECD Trade Policy Papers 39, OECD Publishing.
  5. GUISAN, Carmen & Neira, Isabel, 2006. "Direct and Indirect Effects of Human Capital on World Development, 1960-2004," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(1), pages 17-34.
  6. Muhammad Tariq Majeed & Eatzaz Ahmad, 2007. "FDI and Exports in Developing Countries: Theory and Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 735-750.
  7. 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.
  8. V N Balasubramanyam & V Mahambare, 2003. "Foreign direct investment in India," Working Papers 539987, Lancaster University Management School, Economics Department.
  9. László Kónya & Jai Pal Singh, 2006. "Exports, Imports and Economic Growth in India," Working Papers 2006.06, School of Economics, La Trobe University.
  10. Alexander Cobham, . "Capital Account Liberalisation and Poverty," QEH Working Papers qehwps70, Queen Elizabeth House, University of Oxford.
  11. 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.
  12. Lane, Philip R. & Schmukler, Sergio, 2006. "The International Financial Integration of China and India," CEPR Discussion Papers 5852, C.E.P.R. Discussion Papers.
  13. 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.
  14. 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.
  15. 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).
  16. 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).
  17. 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.
  18. Khattak, Naeem Ur Rehman Khattak & Hussain, Anwar Hussain, 2010. "Determinants of Exports in Pakistan: An Econometric Analysis (1970-2006)," MPRA Paper 41988, University Library of Munich, Germany.

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