Testing for Service-Led and Investment-Led Hypothesis: Evidence from ‘Chindia’
AbstractThis study examines the meaningful relationship between economic growth, and service sector contribution and domestic investment in two major Asian economies, namely India and China. Autoregressive Distributed Lag (ARDL) bounds testing procedure is employed to analyze the impact of the selected variables namely (1) contribution by the service sector, (2) (4) domestic investment on economic growth and vice versa. The period of interest is 1960-2005 using annual data. The empirical results demonstrate that for the case of India, there is (1) a unidirectional causality from domestic investment to economic growth and (2) from economic growth to services. As for China, only unidirectional causality from services sector to economic growth is detected, while no meaningful relationship was found between domestic investment and economic growth.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 11924.
Date of creation: 17 Oct 2008
Date of revision:
Service-led; investment-led; growth; China; India;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-07 (All new papers)
- NEP-CNA-2008-12-07 (China)
- NEP-CWA-2008-12-07 (Central & Western Asia)
- NEP-MAC-2008-12-07 (Macroeconomics)
- NEP-SEA-2008-12-07 (South East Asia)
- NEP-TRA-2008-12-07 (Transition Economics)
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