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SMEs and Economic Growth in India: Cointegration Analysis

Author

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  • Annapurna Dixit
  • Alok Kumar Pandey

Abstract

Available studies on Small and Medium Enterprises (SMEs) have mainly focused on performance indicators, role of financial institutions and sources of growth in many developing countries. The present study utilizes the cointegration analysis to examine the causal relationship between SMEs output, exports, employment, number of SMEs and their fixed investment and India’s GDP, total exports and employment (public and private) for the period 1973-74 to 2006-07. The result reveals positive causality between SMEs output and India’s GDP. Error Correction Mechanism (ECM) was employed for analyzing the short-run relationship between the variables relating to SMEs and India’s growth. The ECM results indicate that independent variables positively affect the dependent variables in the short run.

Suggested Citation

  • Annapurna Dixit & Alok Kumar Pandey, 2011. "SMEs and Economic Growth in India: Cointegration Analysis," The IUP Journal of Financial Economics, IUP Publications, vol. 0(2), pages 41-59, June.
    • Handle: RePEc:icf:icfjfe:v:09:y:2011:i:2:p:41-59
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    Cited by:

    1. Parimal Merchant & Arya Kumar & Debasis Mallik, 2018. "Factors Influencing Family Business Continuity in Indian Small and Medium Enterprises (SMEs)," Journal of Family and Economic Issues, Springer, vol. 39(2), pages 177-190, June.
    2. TUMIWA Johan & TUEGEH Octavia & NAGY Adrián Szilárd, 2020. "Factor Influencing Msmes Performance Measurement - A Literature Review," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 151-162, July.
    3. Lee, Keun & Kim, Byung-Yeon & Park, Young-Yoon & Sanidas, Elias, 2013. "Big businesses and economic growth: Identifying a binding constraint for growth with country panel analysis," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 561-582.
    4. Surat Singh & Dalbir Singh, 2017. "Small Scale Industries and Economic Growth: Empirical Evidence from India during Post Economic Reforms Era," Shanlax International Journal of Economics, Shanlax Journals, vol. 6(1), pages 94-102, December.
    5. Sylvain Bureau & Elisa Salvador & Jacqueline Fendt, 2012. "Small firms and the growth stage: can entrepreneurship education programmes be supportive?," Post-Print hal-02530098, HAL.

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