Impact of Foreign Trade and COVID-19 Pandemic on Sri Lankan and Indian Economy: A Comparative Study

Susobhan Maiti () and Tanushree Gupta
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Susobhan Maiti: JAIN (Deemed-to-be University)
Tanushree Gupta: Sandip University

Chapter Chapter 9 in COVID-19 Pandemic and Global Inequality, 2023, pp 139-152 from Springer

Abstract: Abstract Sri Lanka's economy suffers and foreign investment plummeted during Covid. Due to trade restrictions, inflation, and financial instability, India has the lowest labor force participation rate due to trade prohibitions, inflation, and financial instability. This study uses Sri Lanka and India because Sri Lanka's economy collapsed and was unstable which drew the attention of the whole world. On the other hand, India's Gross Domestic Product (GDP) slowed rising unemployment, and inflation which may be worse in the future. “Does India resemble Sri Lanka?” politicians asked rhetorically. Thus, the present study identifies the rise of exports (X), imports (M), and GDP growth (GDP) in two nations and critically evaluates their movements. Side by side to find out the linkage between trade-related elements, the proxy of economic growth, unemployment rate (UNE), and net foreign direct investment (NFDI). Second, to determine whether export (X), import (M), unemployment rate (UNE), net foreign direct investment (NFDI), and economic growth in the two nations are unidirectional or bidirectional. The study shows GDP, X, M, UNE, and NFDI change. COVID-19 lowered GDP, exports, and imports. Granger causality links these variables both ways. The cointegration test shows a long-term relationship between exports, NFDI, and GDP for both nations. UNE and GDP in India and Sri Lanka are linked over time.

Keywords: Gross domestic product; Net foreign direct investment; Unemployment rate; Export; Import; Cointegration; Causality (search for similar items in EconPapers)
JEL-codes: C12 C32 F14 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-4405-7_9

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DOI: 10.1007/978-981-99-4405-7_9

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