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Demand and Supply Factors in the Determination of India's Disaggregated Manufactured Exports: A Simultaneous Error-Correction Aprroach

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  • Sinha Roy, Saikat

Abstract

This paper is an investigation of the demand and supply factors underlying the long-term behaviour of India’s disaggregated manufactured exports. Broadly, there are two divided views on India’s export behaviour: while the predominant view stresses the importance of supply and policy related factors, other studies find the significance of world demand in export determination. The issue is more important than empirical estimation of determinants of exports; it is theoretically motivated as India has been able to expand exports across sectors in tandem with changes in trade regimes. However, the fact of varying export growth across different sector does not lend support to the observation that only policies explain export performance, rather it highlights the importance of other demand and supply factors at the sectoral level. An imperfect substitutes demand-supply model of export determination is set out and the model is estimated in an error-correction framework using systems method. The model explains behaviour of disaggregated exports well. It shows the importance of demand as well as supply effects in the determination of India’s disaggregated exports except textiles and garments.

Suggested Citation

  • Sinha Roy, Saikat, 2007. "Demand and Supply Factors in the Determination of India's Disaggregated Manufactured Exports: A Simultaneous Error-Correction Aprroach," MPRA Paper 68589, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:68589
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    References listed on IDEAS

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    5. Morris Goldstein & Mohsin S. Khan, 2017. "The Supply and Demand for Exports: A Simultaneous Approach," World Scientific Book Chapters, in: TRADE CURRENCIES AND FINANCE, chapter 2, pages 83-104, World Scientific Publishing Co. Pte. Ltd..
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    8. Muscatelli, V A & Srinivasan, T G & Vines, D, 1992. "Demand and Supply Factors in the Determination of NIE Exports: A Simultaneous Error-Correction Model for Hong Kong," Economic Journal, Royal Economic Society, vol. 102(415), pages 1467-1477, November.
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    11. Holly, Sean & Wade, Keith, 1991. "UK Exports of Manufactures: The Role of Supply Side Factors," Scottish Journal of Political Economy, Scottish Economic Society, vol. 38(1), pages 1-18, February.
    12. Engle, R. F. & Granger, C. W. J. (ed.), 1991. "Long-Run Economic Relationships: Readings in Cointegration," OUP Catalogue, Oxford University Press, number 9780198283393.
    13. Michael Funke & Sean Holly, 1992. "The determinants of West German exports of manufactures: An integrated demand and supply approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 128(3), pages 498-512, September.
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    Cited by:

    1. Maitri Ghosh & Saikat Sinha Roy, 2018. "Foreign Direct Investment, Firm Heterogeneity, and Exports: An Analysis of Indian Manufacturing," Asian Development Review, MIT Press, vol. 35(1), pages 27-51, March.

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    More about this item

    Keywords

    Disaggregated manufactured exports; imperfect substitutes demand-supply model; simultaneous error-correction mechanism; price responsiveness of exports; world demand.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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