IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/103702.html
   My bibliography  Save this paper

Measurement of Investment Contribution of Service Sector in India’s Economic Growth

Author

Listed:
  • Thomas, Mini P

Abstract

This paper aims to measure the investment contribution of service sector in India’s economic growth. This study brings in a novel approach by using the national income accounting framework and Harrod Domar Model to quantify services investment contribution. The study makes a distinction between public and private investment within service sector, and identifies the sub-sectors which are major contributors. The services contribution to Foreign Direct Investment into the Indian economy is also measured. This study finds that private investment started exceeding public investment within service sector from 1994-95 onwards. Public administration and defence is found to be the major sub-sector contributing to public investment during the pre-reform phase. Real estate and business services is found to be the major sub-sector contributing to private investment during the post-reform phase. Actual growth rate of service sector is found to be higher than the predicted growth rate during most of the study period.

Suggested Citation

  • Thomas, Mini P, 2019. "Measurement of Investment Contribution of Service Sector in India’s Economic Growth," MPRA Paper 103702, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:103702
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/103702/1/MPRA_paper_103702.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Joshua Greene & Delano Villanueva, 1991. "Private Investment in Developing Countries: An Empirical Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 38(1), pages 33-58, March.
    2. Pilbeam, Keith & Oboleviciute, Neringa, 2012. "Does Foreign Direct Investment Crowd In or Crowd Out Domestic Investment? Evidence from the European Union," The Journal of Economic Asymmetries, Elsevier, vol. 9(1), pages 89-104.
    3. Jagannath Mallick, 2009. "Trends and Patterns of Private Investment in India," Working Papers 226, Institute for Social and Economic Change, Bangalore.
    4. Miguel Ramirez, 2000. "The impact of public investment on private investment spending in Latin America: 1980–95," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 28(2), pages 210-225, June.
    5. Mazumdar, Surajit, 2008. "Investment and growth in India under liberalization: Asymmetries and Instabilities," MPRA Paper 19629, University Library of Munich, Germany.
    6. Planning Commission, India, 2011. "Faster, Sustainable and More Inclusive Growth: An Approach to the 12th Five Year Plan," Working Papers id:4452, eSocialSciences.
    7. Jalava, Jukka & Pohjola, Matti, 2002. "Economic growth in the New Economy: evidence from advanced economies," Information Economics and Policy, Elsevier, vol. 14(2), pages 189-210, June.
    8. Pritha Mitra, 2006. "Has Government Investment Crowded Out Private Investment in India?," American Economic Review, American Economic Association, vol. 96(2), pages 337-341, May.
    9. Areej Aftab Siddiqui & Shahid Ahmed, 2017. "Impact of Foreign Direct Investment on Sectoral Growth of Indian Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 477-488.
    10. Mini P. Thomas, 2017. "Empirics of service taxation in India: a macroeconomic perspective," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 19(1), pages 143-160, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sajad Ahmad Bhat & Javed Ahmad Bhat & Taufeeq Ajaz, 2020. "The Public–Private Investment Nexus In India: Evidence From A Policy Simulation Approach," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(224), pages 101-128, January –.
    2. Dierk Herzer & Michael Grimm, 2012. "Does foreign aid increase private investment? Evidence from panel cointegration," Applied Economics, Taylor & Francis Journals, vol. 44(20), pages 2537-2550, July.
    3. Mahmud, Sakib & Hassan, Gazi, 2014. "Consequences of Public Programs and Private Transfers on Household’s Investment in Storm Protection," MPRA Paper 60004, University Library of Munich, Germany.
    4. Ranjan Kumar Mohanty, 2016. "Does Fiscal Deficit Crowd Out Private Corporate Sector Investment In India?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(05), pages 1201-1224, November.
    5. Sajad Ahmad Bhat & Bandi Kamaiah, 2021. "Fiscal policy and macroeconomic effects: structural macroeconometric model and simulation analysis," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 23(1), pages 81-105, June.
    6. Bahal, Girish & Raissi, Mehdi & Tulin, Volodymyr, 2018. "Crowding-out or crowding-in? Public and private investment in India," World Development, Elsevier, vol. 109(C), pages 323-333.
    7. Micheal Kofi Boachie & Martin Ruzima & Mustapha Immurana, 2020. "The Concurrent Effect of Financial Development and Trade Openness on Private Investment in India," South Asian Journal of Macroeconomics and Public Finance, , vol. 9(2), pages 190-220, December.
    8. Anh Hoang To & Duc Hong Vo, 2020. "The Balanced Energy Mix for Achieving Environmental and Economic Goals in the Long Run," Energies, MDPI, vol. 13(15), pages 1-21, July.
    9. Cevik, Serhan, 2020. "You are suffocating me: Firm-level analysis of state-owned enterprises and private investment," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 292-301.
    10. Ramirez, Miguel D., 2007. "Is Foreign Direct Investment Productive in the Latin America Case? A Panel Unit Root and Panel Cointegration Analysis, 1980-2001," Working Papers 23, Yale University, Department of Economics.
    11. International Monetary Fund, 2008. "Benin: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2008/084, International Monetary Fund.
    12. Sallahuddin Hassan & Zalila Othman & Mohd Zaini Abd Karim, 2011. "Private and Public Investment in Malaysia: A Panel Time-Series Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 199-210.
    13. Ghassan, Hassan B., 2011. "Public and Private Investment in Saudi Economy: Evidence from Weak Exogeneity and Bound Cointegration Tests," MPRA Paper 56537, University Library of Munich, Germany.
    14. Mallick, Hrushikesh & Mahalik, Mantu Kumar & Sahoo, Manoranjan, 2018. "Is crude oil price detrimental to domestic private investment for an emerging economy? The role of public sector investment and financial sector development in an era of globalization," Energy Economics, Elsevier, vol. 69(C), pages 307-324.
    15. Jagannath Mallick, 2013. "Private investment in India: regional patterns and determinants," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 515-536, October.
    16. Abbas, Aadil & Masih, Mansur, 2017. "Which investment (private or public) does contribute to economic growth more? a case study of South Africa," MPRA Paper 108919, University Library of Munich, Germany.
    17. repec:ilo:ilowps:366690 is not listed on IDEAS
    18. Hrushikesh Mallick, 2008. "Do remittances impact the economy? Some empirical evidences from a developing economy," Centre for Development Studies, Trivendrum Working Papers 407, Centre for Development Studies, Trivendrum, India.
    19. Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie‐Ange VÉGANZONÈS‐VAROUDAKIS, 2007. "Governance Institutions And Private Investment: An Application To The Middle East And North Africa," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 339-377, September.
    20. Susanna M Makela & Rakhi Dandona & T R Dilip & Lalit Dandona, 2013. "Social Sector Expenditure and Child Mortality in India: A State-Level Analysis from 1997 to 2009," PLOS ONE, Public Library of Science, vol. 8(2), pages 1-10, February.
    21. Tudorache, Maria-Daniela, 2020. "Examining the Drivers of Human Development in European Union," EconStor Conference Papers 222443, ZBW - Leibniz Information Centre for Economics.

    More about this item

    Keywords

    Service sector; private investment; Indian economy; FDI;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:103702. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.