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Do Institutional Quality and Trade Openness Influence Economic Growth? An Empirical Evidence from India

In: Studies in International Economics and Finance

Author

Listed:
  • Arun Kumar Giri

    (Birla Institute of Technology and Science (BITS))

  • Geetilaxmi Mohapatra

    (Birla Institute of Technology and Science (BITS))

Abstract

The study empirically examines the impact of trade openness and institutional quality on economic growth in India for the period 1990–2019. The study uses export plus imports as a ratio of GDP and composite governance indicators to measure trade openness and institutional quality, respectively. GDP per capita is used as the proxy for economic growth along with financial development, domestic capital, exchange rate, and inflation as other conventional determinants of economic growth. Autoregressive distributed lag (ARDL) co-integration approach along with the first-generation unit root tests is used in the present study to test empirical relationships. The results reveal that both trade openness and institutional quality exert a significant and positive impact on economic growth in both the long and short runs. Further, the interaction of trade openness and institutional quality is shown to have a significant impact on economic growth as well. The estimates also confirm that domestic capital and financial development have a significant positive influence on the economic growth of the country. The results further indicate that the exchange rate has a significant negative impact on economic growth in both long run and short run.

Suggested Citation

  • Arun Kumar Giri & Geetilaxmi Mohapatra, 2022. "Do Institutional Quality and Trade Openness Influence Economic Growth? An Empirical Evidence from India," India Studies in Business and Economics, in: Naoyuki Yoshino & Rajendra N. Paramanik & Anoop S. Kumar (ed.), Studies in International Economics and Finance, pages 165-182, Springer.
    • Handle: RePEc:spr:isbchp:978-981-16-7062-6_9
    DOI: 10.1007/978-981-16-7062-6_9
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    More about this item

    Keywords

    Trade openness; Institutional quality; Economic growth; ARDL; India;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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