Agricultural Exports and Performance of Agricultural Firms in India: An Empirical Analysis using System GMM

Sandip Solanki (), Seema Singh () and Inumula Krishna Murthy ()

Asian Economic and Financial Review, 2022, vol. 12, issue 2, 121-131

Abstract: The relationship between agricultural exports and agricultural company performance in India is investigated in this research. The objective of the study is to find the relationship among agriculture firms’ financial performance and agriculture exports and macroeconomic indicators. System generalized method of moments (GMM) models are used to explore the dynamic linkage between exports and firm performance from 2012 to 2019. The findings indicate that agriculture exports have a significant negative correlation with interest rates, and the value addition of exports to GDP indicates that higher interest rates and more value addition to GDP results in a reduction in agriculture exports. This negative relationship between agriculture exports and the profitability of firms implies that an increase in exports potentially reduces the profit margins. The agriculture firms’ financial performance is closely monitored with agriculture exports, which facilitates the exploration of sectoral performance and can be linked with export performance for future studies. The study results cannot be generalized to the other countries due to demographic and other natural constraints. The results are critical for decision makers who want to develop strategies that support the agriculture sector. Implementing the right policies may incentivize investment in this industry. Furthermore, the results have significant theoretical consequences, bridging the theoretical and experimental literature gaps in the agricultural sector.

Keywords: Agricultural raw materials exports; GMM model; Financial performance; Agriculture value added; Indian agriculture firms; Correlation and sectoral performance. (search for similar items in EconPapers)
Date: 2022
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