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Re-examining export-led growth hypothesis: a multivariate cointegration analysis for India


  • Urvashi Dhawan
  • Bagala Biswal


This paper re-examines the export-led-growth (ELG) hypothesis using a vector autoregressive (VAR) model by considering the relationship between real GDP, real exports and terms of trade for India during the period 1961-93. In re-examining the ELG hypothesis, this study, perhaps for the first time, employs a multivariate framework using Johansen's model selection and maximum likelihood cointegration procedure. The results sugest that there is one long-run equilibrium relationship among the three variables, and the causal relationship flows from the growth in GDP and terms of trade to the growth in exports. The causality from exports to GDP appears to be a short run phenomenon, suggesting that the recent export promotion strategies adopted in India have the potential of bearing growth in the future.

Suggested Citation

  • Urvashi Dhawan & Bagala Biswal, 1999. "Re-examining export-led growth hypothesis: a multivariate cointegration analysis for India," Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 525-530.
  • Handle: RePEc:taf:applec:v:31:y:1999:i:4:p:525-530
    DOI: 10.1080/000368499324246

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    Cited by:

    1. László Kónya & Jai Pal Singh, 2006. "Exports, Imports and Economic Growth in India," Working Papers 2006.06, School of Economics, La Trobe University.
    2. Sumie Sato & Mototsugu Fukushige, 2007. "The End of Import-Led Growth? North Korean Evidence," Discussion Papers in Economics and Business 07-38, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    3. Jaime Andrés Collazos & Pedro Luis Rosero, 2010. "¿Posee el Valle del Cauca una economía transformadora de importaciones orientadas a la Exportación?," DOCUMENTOS DE POLÍTICAS PÚBLICAS 006880, UNIVERSIDAD ICESI.
    4. Maryam Asghari, 2012. "Environmental Kuznets Curve and Growth Source in Iran," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(5), pages 609-623, December.
    5. Yaya KEHO, 2017. "The Exports and Economic Growth Nexus in Cote D ivoire: Evidence from a Multivariate Time Series Analysis," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 5(2), pages 135-146, June.
    6. SAHOO, Pravakar & KUMAR DASH, Ranjan, 2014. "India's surge in Modern Services Exports: Empirics for policy," Working Papers 2014010, University of Antwerp, Faculty of Applied Economics.
    7. Love, Jim & Chandra, Ramesh, 2005. "Testing export-led growth in Bangladesh in a multivarate VAR framework," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1155-1168, January.
    8. Sato, Sumie & Fukushige, Mototsugu, 2011. "The North Korean economy: Escape from import-led growth," Journal of Asian Economics, Elsevier, vol. 22(1), pages 76-83, February.
    9. Logan Rangasamy, 2009. "Exports and economic growth: The case of South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(5), pages 603-617.
    10. Saten Kumar, 2011. "Estimating export demand equations in selected Asian countries," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing, vol. 4(1), pages 5-16, February.
    11. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, Elsevier.
    12. Komain Jiranyakul, 2010. "Recent evidence of the validity of the export-led growth hypothesis for Thailand," Economics Bulletin, AccessEcon, vol. 30(3), pages 2151-2159.
    13. Sahoo, Auro Kumar & Sahoo, Dukhabandhu & Sahu, Naresh Chandra, 2014. "Mining export, industrial production and economic growth: A cointegration and causality analysis for India," Resources Policy, Elsevier, vol. 42(C), pages 27-34.

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