India in the World Economy: Inferences from Empirics of Economic Growth
ESRI Discussion paper series from Economic and Social Research Institute (ESRI)
The aim of this study is to investigate the growth experiences of India in relation to the experiences of around one hundred countries in the world during the last half-century by exploiting the inferences drawn from the cross-country growth regressions. This study obtains the following findings. First, the outcome of growth regression supports the conditional convergence hypothesis. In contrast, both India's growth rate and income level have increased, breaking the convergence hypothesis. Second, the growth regression shows life expectancy at birth, investment ratio and external openness contributes to economic growth. In India these three were improved. Third, the growth regression suggests human capital has a non-linear effects on economic growth and that the schooling years beyond 3 years raise the growth rate. In India both schooling years and growth rate have increased. Fourth, the growth regression shows that total fertility rate has a negative effect on the growth. In India the growth rate increased as the total fertility rate declined. Fifth, the growth regression shows that government consumption reduces the growth rate. Contrary to the regression results both India's growth rate and government consumption have increased. Sixth, the growth regression suggests inflation has a negative effect on growth rate. However, there are no clear relationship between inflation and growth in India. Seventh, the growth regression shows the improvement of terms of trade contributes to economic growth. The same was observed in India where terms of trade fluctuated over time. Finally the growth regression supposes that democracy and economic growth have a non-linear complex relationship and that the relationship differs depending on the position of the distribution of growth rates.There are no clear relationship between democracy and growth in India where the India's status of democracy has hardly varied. JEL classification: O11, O47, O53 Key words: economic growth, growth regression, India.
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