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Determinants of long-term growth in India: a Keynesian approach

Author

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  • Sushanta K. Mallick

    (The Royal Institute of International Affairs, London, UK, smallick@riia.org)

Abstract

This paper attempts an eclectic synthesis on long-term growth, which integrates two standard models - the neoclassical model with the endogenous growth and export-led model of growth. A vector autoregressive (VAR) model has been used for India from 1950 to 1995 using Johansen’s multivariate cointegration approach to derive latent equilibrium relationships, and the short-run error correction equations are then estimated. Two cointegrating relationships for real output and real private investment, respectively, were found. Output is determined by private investment, human capital, real interest rate and public investment. Private investment is driven by public investment, domestic credit to the private sector, real interest rate and human capital. This seems to support a McKinnon-Shaw model in the long run and a Keynesian/Structuralist view in the short run. The long-run model also validates the hypothesis that growth has not been export-led in India, rather it is growth-driven exports.

Suggested Citation

  • Sushanta K. Mallick, 2002. "Determinants of long-term growth in India: a Keynesian approach," Progress in Development Studies, , vol. 2(4), pages 306-324, October.
  • Handle: RePEc:sae:prodev:v:2:y:2002:i:4:p:306-324
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    Cited by:

    1. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2017. "Public and private investment and economic growth in Malawi: An ARDL-bounds testing approach," Working Papers 22003, University of South Africa, Department of Economics.
    2. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2017. "Public and private investment and economic growth in South Africa:An empirical investigation," Working Papers 22005, University of South Africa, Department of Economics.
    3. repec:pdc:jrnbeh:v:13:y:2017:i:1:p:60-76 is not listed on IDEAS
    4. Garikai Makuyana & Nicholas M. Odhiambo, 2017. "Public and private investment and economic growth in Zimbabwe: An empirical test," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(1), pages 60-76, March.
    5. Makuyana, Garikai & Odhiambo, Nicholas Mbaya, 2016. "Public and private investment and economic growth in Zambia: A dynamic approach," Working Papers 21377, University of South Africa, Department of Economics.

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