Bera, Soumitra Kumar (2010): Financial crisis: The incrediable hulk in Indian economic growth and external sector.
Download (1MB) | Preview
This paper empirically examines the impact of current world-wide recession on India’s growth. The data for this study were compiled from RBI and Central Statistical Organisation (CSO). The paper has applied regression technique with GDP as dependent variable, while exports, imports, FDI and FII were taken as independent variables. Prior to regression analysis, all the variables are tested for stationarity, applying Augmented Dickey-Fuller (ADF) test. The data sets were also tested for seasonality by applying auxiliary regression. Because of the problem of multicolinearity among the independent variables, three models, dropping one of the highly collinear variables, were estimated. The results suggest that financial crisis has adversely impacted India’s GDP although imports, exports and FDI were found to have exercised stimulating influence through technological spillovers and other externalities. The paper suggests that recovery of global economy is extremely important for Indian economic growth although the effects of global slow down could be minimized through the use of stimulant fiscal and monetary measures.
|Item Type:||MPRA Paper|
|Original Title:||Financial crisis: The incrediable hulk in Indian economic growth and external sector|
|Keywords:||The impact on the world economy; Impact on Indian Economy; Impact on External Sector; Data Sources and Methodology; Regression Analysis: Discussion and Interpretation; Seasonality test; Regression Results and discussion; Conclusions|
|Subjects:||F - International Economics > F3 - International Finance > F37 - International Finance Forecasting and Simulation: Models and Applications
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence
P - Economic Systems > P4 - Other Economic Systems > P45 - International Trade, Finance, Investment, and Aid
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies
|Depositing User:||S K Mishra|
|Date Deposited:||31. Dec 2010 06:44|
|Last Modified:||16. Mar 2015 03:58|
Awokuse Titus O, (2007), “Causality between exports, imports, and economic growth: Evidence from transition economies” Economics Letters Vol. 94, pp 389–395.
Baltagi, Badi H, (2001), “Econometric analysis of Panel data”, 2nd edition, John Wiley & Sons.
Bende-Nebende, A.A., J.L. Ford, S. Sen, and J. Slater (2000), “Long-run Dynamics of FDI and Its Spillovers onto Output: Evidence from the Asia-Pacific Economic Cooperation Region”, University of Birmingham, Department of Economics, Discussion Paper.
Bhagwati, J., (1988) “Protectionism, Cambridge”, MA, MIT Press.
Blomström, M and A Kokko (1998), "Multinational Corporations and Spillovers," Journal of Economic Surveys, Vol. 12, pp. 247-77.
Borensztein, E.J., D. Gregorio and J.W. Lee (1995), “How Does Foreign Direct Investment Affect Economic Growth?” NBER Working Paper No: 3 5057 . Caves, R.E. (1974), ”Multinational Firms, Competition and Productivity in Host Country Market,” Economics, Vol. 41, pp.176-193.
Chandrasekhar, C. P. and Jayati Ghosh (2008), ‘India and the Global Financial Crisis’, http://macroscan.com/fet/oct08/print/prnt15102008Crisis.htm)
De Mello Jr., L.R. (1997), “Foreign Direct Investment in Developing Countries and Growth: A Selective Survey,” The Journal of Development Studies, 34(1): 1-34.
De Mello Jr., L.R. (1999), “Foreign Direct Investment-led Growth: Evidence from Time Series and Panel Data,” Oxford Economic Papers, Vol. 51, pp. 133-154.
Dicky, D.A and W.A Fuller (1981). “Likelihood ratio statistics for autoregressive time series with a unit root”, Econometrica 49: 1057-72. July. Dirk Willem te Velde, 2008, The global financial crisis and developing countries, Background Note, Overseas Development Institute, Oct. London, http://www.odi.org.uk/resources/download/2462.pdf
Durham, J. (2004), “Absorptive Capacity and the Effects of Foreign Direct Investment and Equity foreign portfolio investment of economic growth” European Economic Review 48(2):285-306.
Feder, G., (1982). “On exports and economic growth”, Journal of Development Economics, Vol. 12, pp- 59-73.
Frankel, J. A., & Romer, D. (1999). “Does trade cause growth?” American Economic Review, Vol. 89, pp-379–399 Frankel, J. A., Romer, D., & Cyrus, T. (1996). Trade and growth in East Asian countries: Cause and effects? NBER Working Paper No. 5732.
Globerman, S. (1979), “Foreign Direct Investment and Spillover Efficiency Benefits in Canadian Manufacturing Industries,” Canadian Journal of Economics, Vol-12, pp. 42- 56. Grossman, G. M., & Helpman, E. (1997). “Innovation and growth in the global economy. Cambridge”, MA: MIT Press.
He Dong, and Wenlang Zhang, (2009), “ How dependent is the Chinese economy on exports and in what sense has its growth been export-led?” Journal of Asian Economics, Paper in the press.
Helpman E. and Grossman, G., (1991) “Innovation and Growth in the Global Economy, Cambridge”, MA: MIT Press, 1991.
Kónya László (2006) “Exports and growth: Granger causality analysis on OECD countries with a panel data approach”, Economic Modelling, Vol. 23, pp 978–992. Lipsey, R.E. (1999), "The Location and Characteristics of U.S. Affiliates in Asia," NBER Working Papers 6876, National Bureau of Economic Research.
Love Jim, and Ramesh Chandra, (2005), “ Testing export-led growth in Bangladesh in a multivariate VAR framework” Journal of Asian Economics , Vol. 15, pp 1155–168
Marin, D., (1992). “Is the export-led growth hypothesis valid for industrialized countries?”, Review of Economic Statistics, Vol. 74, pp 678-688.
Michaely, M., (1977). “Exports and growth: an empirical investigation”. Journal of Development Economics, Vol. 40, pp 49-53.
Mohan T T Ram (2009) “The Impact of the Crisis on the Indian Economy” Economic & Political Weekly, March 28, 2009 Vol xliv No 13.
Nair Reichert, U. and D. Weinhold (2001), “Causality Tests for the Cross-country Panels: A New Look at the FDI & Economic Growth in Developing Countries,” Oxford Bulletin of Economics & Statistics, Vol. 63, pp 0305-9049.
Rakshit Mihir (2009), “ India amidst the Global Crisis” Economic & Political Weekly, March 28, 2009 Vol xliv No 13.
Rivera-Batiz, L., Romer, P., (1991), “Economic integration and endogenous growth”, Quarterly Journal of Economics, Vol. 106, pp 531-556.
Romer, P., (1990), “Endogenous technological change”, Journal of Political Economy, Vol. 98, pp 71-102.
Subbarao, 2009, ‘Impact of the Global Financial Crisis on India Collateral Damage and Response’ Speech delivered at the Symposium on "The Global Economic Crisis and Challenges for the Asian Economy in a Changing World" organized by the Institute for International Monetary Affairs, Tokyo on February 18, 2009. Accessed on July 12, 2009 http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=410
Thornton John, (1996), “Co-integration, causality and export-led growth in Mexico, 1895-1992”, Economics Letters , Vol. 50, pp 413-416
UNCTAD (1999), Trends in International Investment Agreements: An Overview, United Nations Publication, Sales No. E.99.11.D.23. UNCTAD (2003), “Investment Policy Review of Nepal,” New York
Wooldridge Jearey M, (2002), “Econometric Analysis of Cross Section and Panel Data”, The MIT Press, Cambridge, Massachusetts London, England.
Xu, B (2000), MNEs, Technology Diffusion and Host Country Productivity Growth, Journal of Development Economics, Vol.16, pp. 477-493.