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Exports, imports and economic growth in India: Evidence from cointegration and causality analysis

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  • Raju GUNTUKULA

    (University of Hyderabad, India)

Abstract

The relationship between exports, imports and economic growth in India has been analysed by a large number of empirical studies in the recent past. However, this paper examines the relationship between exports, imports and economic growth in an unexplored way. The study uses monthly dataset for the first time. Johansen’s Co-integration and Granger causality tests were employed in the empirical analysis, using Augmented Dickey Fuller (ADF) and Dickey Fuller (DF) tests. The present study covers data of 12 years’ period from April 2005 to March 2017. The variables used for the study are of I (1) i.e. first order of difference means that they are stationary at first order difference. The Johansen and Juselius Cointegration test was used to determine the presence of a cointegration vector in the variables. Both the ‘Trace and Max-Eigen’ values specified cointegration at 5 percent level of significance, specifying that the variables have a long run relationship. The results of the Granger causality test show that there is bidirectional causality running between exports and economic growth (IIP) as well as imports and economic growth. Therefore, the study confirms that there is bidirectional causality has been found between exports and economic growth which support export-led growth and growth-led export hypothesis. However, this study finally suggests that both growth as well as export promotion strategy are to be pursued consistently with an emphasis on sustainable and inclusive growth.

Suggested Citation

  • Raju GUNTUKULA, 2018. "Exports, imports and economic growth in India: Evidence from cointegration and causality analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(615), S), pages 221-230, Summer.
    • Handle: RePEc:agr:journl:v:2(615):y:2018:i:2(615):p:221-230
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    1. Nicholas M. Odhiambo, "undated". "Is Export-Led Growth Hypothesis Still Valid For Sub-Saharan African Countries? New Evidence From Panel Data Analysis," Working Papers AESRI01, African Economic and Social Research Institute (AESRI).
    2. Nicholas M. Odhiambo, 2021. "Is export-led growth hypothesis still valid for sub-Saharan African countries? New evidence from panel data analysis," European Journal of Management and Business Economics, Emerald Group Publishing Limited, vol. 31(1), pages 77-93, April.
    3. Bakari, Sayef & Khalfallah, Sirine & Zidi, Ahmed, 2021. "The Determinants of Agricultural Exports: Empirical Validation for the Case of Tunisia," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 9(3), October.
    4. Hsiang-Hsi Liu & Chien-Kuo Tseng, 2022. "Common Components in Co-integrated System and Its Estimation and Application: Evidence from Five Stock Markets in Asia-Pacific Chinese Region," Bulletin of Applied Economics, Risk Market Journals, vol. 9(2), pages 101-121.
    5. Kalaitzi Athanasia Stylianou & Kherfi Samer & Alrousan Sahel & Katsaiti Marina-Selini, 2022. "Are Non-Primary Exports the Source for Further Economic Growth in the UAE?," Review of Middle East Economics and Finance, De Gruyter, vol. 18(1), pages 29-51, April.
    6. Odhiambo, Nicholas M, 2021. "A test of exports-led growth hypothesis in Sub-Saharan African countries: Evidence from panel data analysis," Working Papers 27170, University of South Africa, Department of Economics.
    7. Ankit CHHIKARA & Laurel PASRICHA, 2021. "Causal relationship between agricultural exports and economic growth: a diagnostic approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(627), S), pages 33-44, Summer.
    8. Raju Guntukula & Phanindra Goyari, 2020. "Climate Change Effects on the Crop Yield and Its Variability in Telangana, India," Studies in Microeconomics, , vol. 8(1), pages 119-148, June.
    9. Channew Maneerat & Snober Fazal, 2020. "The Influence of Tax Revenue, Government Expenditures, Fiscal Decentralization, Carbon Emission and Exports on Economic Growth of Developing Countries," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 1(2), pages 1-12, June.
    10. Moses Aondohemba TYOKOSU & Nicholas Abakpa, 2023. "The Relationship between Trade Openness and Economic Growth in Nigeria from 2000 to 2020," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(11), pages 1766-1778, November.
    11. Amjad Taha & Mucahit Aydin & Taiwo Temitope Lasisi & Festus Victor Bekun & Narayan Sethi, 2023. "Toward a sustainable growth path in Arab economies: an extension of classical growth model," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-24, December.
    12. Bakari, Sayef, 2024. "Causality between Domestic Investment and Economic Growth: New Evidence from Argentina," MPRA Paper 121799, University Library of Munich, Germany.
    13. N.M. Odhiambo, 2021. "Is Export-Led Growth Hypothesis Still Valid for Sub-Saharan African Countries? New Evidence from Panel Data Analysis," Working Papers AESRI-2021-02, African Economic and Social Research Institute (AESRI), revised Jan 2021.
    14. Nicholas M Odhiambo, 2021. "Is Export-Led Growth Hypothesis Still Valid For Sub-Saharan African Countries? New Evidence From Panel Data Analysis," Working Papers AERI0121, African Economic and Social Research Institute (AESRI), revised 25 Aug 2021.
    15. Nicholas M. Odhiambo, 2021. "Is export-led growth hypothesis still valid for sub-Saharan African countries? New evidence from panel data analysis," European Journal of Management and Business Economics, Emerald Group Publishing Limited, vol. 31(1), pages 77-93, April.

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