Export-Led Growth in India: Cointegration and Causality Analysis
Deepika Kumari, Dr. Neena Malhotra

The extensive research testing export led growth hypothesis in India have been mixed and inconclusive. Difference in time periods, variable definitions and techniques are three possible reasons for this. This paper explores the causal relationship between exports and economic growth by employing Johansen cointegration and Granger causality approach. Annual time series data on India for the variables exports and GDP per capita stemming from 1980 to 2012 have been used in analysis. The tests on the long run and short run relationship between exports and economic growth are conducted. Based on the findings of cointegration approach this paper concludes that there does not exist long run equilibrium relationship between exports and GDP per capita. Granger causality test exhibits bidirectional causality running from exports to GDP per capita and GDP per capita to exports.

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