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FDI in the Service Sector – Propagator of Growth for India?

Author

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  • Sen, Chitrakalpa

Abstract

The last two decades have witnessed an unprecedented growth of the Indian service sector. This paper aims to analyze the growth dynamics. This study intends to see whether the growth in FDI has any significant impact on the service sector growth and also investigates whether a growth in this sector causes the GDP to grow. The results suggest that there has been a significant positive impact of the FDI on services sector and this service sector growth has in turn a significant effect on the GDP. The study also looks into the sub-sectoral dynamics and indicates towards the fact that the trade, hotels and restaurants, transport, storage and communications sub-sector contributes the most in the growth of Indian service sector. Therefore FDI can be truly be used as a propagator of economic growth, via its favourable effect on the growth in the services sector. Finally, the study addresses the long running sustainability debate regarding the Indian service sector.

Suggested Citation

  • Sen, Chitrakalpa, 2011. "FDI in the Service Sector – Propagator of Growth for India?," MPRA Paper 30574, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:30574
    as

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    File URL: https://mpra.ub.uni-muenchen.de/30574/1/MPRA_paper_30574.pdf
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    References listed on IDEAS

    as
    1. Barry Eichengreen & Poonam Gupta, 2013. "The two waves of service-sector growth," Oxford Economic Papers, Oxford University Press, vol. 65(1), pages 96-123, January.
    2. Barry Bosworth & Susan M. Collins & Arvind Virmani, 2006. "Sources of Growth in the Indian Economy," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 3(1), pages 1-69.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Service sector; FDI; Economic growth;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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