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RELATIONSHIP BETWEEN TRADE OPENNESS AND ECONOMIC GROWTH OF INDIA: A TIME SERIES ANALYSIS

Monojit Chatterji, Sushil Mohan () and Sayantan Ghosh Dastidar

Journal of Academic Research in Economics, 2014, vol. 6, issue 1 (March), 45-69

Abstract: The empirical relationship between trade openness and economic growth of India has been a debatable issue. The existing literature fails to provide an unambiguous answer. The paper examines this empirical relationship for the time period 1970-2010 using Vector Autoregression method and demonstrates that the relationship has evolved over time following the regime change in the early 1980s when the Indian economy started to move from a state-led growth model to a pro-market regime. Therefore, any assumption of a static trade-growth nexus may lead to inaccurate findings. Our econometric results indicate that growth in trade volumes accelerates economic growth of India since 1980-81 onwards. We do not find evidence of any significant association between trade barriers and growth.

Keywords: Trade openness; economic growth; India; time series analysis. (search for similar items in EconPapers)
JEL-codes: F14 F43 O40 (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: Relationship between trade openness and economic growth of India: A time series analysis (2013) Downloads
Working Paper: Relationship between trade openness and economic growth of India: A time series analysis (2013) Downloads
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