Structural Shifts in the Current Account of India's Balance of Payments

Bhupal Singh ()

Margin: The Journal of Applied Economic Research, 2009, vol. 3, issue 2, 133-171

Abstract: This paper explores structural shifts in the current account of India's balance of payments alongside the micro foundations from 1950 to 2008. Key structural features that emerge are the disappearance of twin deficits and the reversal of a unidirectional causality in the post-reform period from foreign savings to domestic investment. Current account deficit, although sustainable, is marked by a significant structural component after adjusting for remittances. Merchandise trade is characterised by higher quantity growth rather than price growth, a transition from low-technology to medium-technology exports, a shift in trade towards developing countries. Service exports exhibit reduced volatility and diversification from traditional to business and technology-related services. This period also witnessed a spatial shift in the sources of workers’ remittances from oil-producing to developed countries, with the overall behaviour of remittances influenced by the income effect in the host country, exchange rate movement and interest rate arbitrage.

Keywords: Balance of Payments; Current Account Deficit; International Trade; Workers' Remittances; JEL Classification: F1; JEL Classification: F32; JEL Classification: F24; JEL Classification: O24 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/097380100900300203 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:3:y:2009:i:2:p:133-171

DOI: 10.1177/097380100900300203

Access Statistics for this article

More articles in Margin: The Journal of Applied Economic Research from National Council of Applied Economic Research
Bibliographic data for series maintained by SAGE Publications ().