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ACT OF EXPORT LED STRATEGIES ON INDIA’S ECONOMIC GROWTH IN THE POST
REFORM ERA
Abstract Introduction
The potential impacts of export-led strategy in the It is conventional wisdom among policy makers and
growth process of different economies have long academics that exports are a key factor in promoting
been recognized by the policy makers. The Export- economic growth in developing countries. There are
Led Growth Hypothesis (ELGH) postulates that several theoretical arguments supporting this
export expansion is one of the key determinants of hypothesis. India has been described as an ‘import
economic growth. Export-expansion acts a catalyst substituting country par excellence’ [Rodrik
for output growth both directly, as well as indirectly. (1996:15)]. A balance of payments crisis in 1991 led
In the light of the above facts, the present paper to the initiation of trade reforms and the process of
attempts to find out whether the export- led growth liberalization. These events made Indian economy a
mechanisms is true with respect to India or not. The more open economy and reduced the bias against
broad objective of this study is to investigate the exports. Policy reforms have also reduced the
causal relationship between exports and economic effectiveness of attempts by Indian firms to hide
growth for the period of 1990-91 to 2011-12, in the behind high tariff barriers and it has challenged
context of India. To test this, the study employs interests that have attempted to perpetuate inefficient
Granger causality test using annual time series data. production.
The estimation results do not support the export-led
growth hypothesis for India, while results show the In recent years, India’s percentage share in world
unidirectional causality from economic growth to exports has been increasing steadily, though at a slow
export. India has always given importance to import pace. Further, India is building up new areas of
substitution over export promotion, which can be strength in export markets by moving to exports of
seen and analyzed from the results. pharmaceuticals, software and engineering
manufactures in addition to the traditional export
Key words: Economic Growth, Exports, Export Led strengths in gems & jewelry, textiles and primary
Growth products [NASSCOM and DGCIS (various issues)].
These events have succeeded in reducing the
Mili Saxena, Senior Lecturer, School of ideological opposition to trade which derived in part
Management Sciences, Varanasi from India’s colonial experience combined with an
E-mail: milisaxena24@yahoo.com obsession with self-sufficiency at any cost. Given
the fact that the export-to-GDP ratio in developing
countries increased from about 13.4 percent in FY
2007 to about 16.3% in 2013 (Exim bank), it
immediately becomes clear that exports have played
a major role in the growth process of developing
(23)
REFORM ERA
Abstract Introduction
The potential impacts of export-led strategy in the It is conventional wisdom among policy makers and
growth process of different economies have long academics that exports are a key factor in promoting
been recognized by the policy makers. The Export- economic growth in developing countries. There are
Led Growth Hypothesis (ELGH) postulates that several theoretical arguments supporting this
export expansion is one of the key determinants of hypothesis. India has been described as an ‘import
economic growth. Export-expansion acts a catalyst substituting country par excellence’ [Rodrik
for output growth both directly, as well as indirectly. (1996:15)]. A balance of payments crisis in 1991 led
In the light of the above facts, the present paper to the initiation of trade reforms and the process of
attempts to find out whether the export- led growth liberalization. These events made Indian economy a
mechanisms is true with respect to India or not. The more open economy and reduced the bias against
broad objective of this study is to investigate the exports. Policy reforms have also reduced the
causal relationship between exports and economic effectiveness of attempts by Indian firms to hide
growth for the period of 1990-91 to 2011-12, in the behind high tariff barriers and it has challenged
context of India. To test this, the study employs interests that have attempted to perpetuate inefficient
Granger causality test using annual time series data. production.
The estimation results do not support the export-led
growth hypothesis for India, while results show the In recent years, India’s percentage share in world
unidirectional causality from economic growth to exports has been increasing steadily, though at a slow
export. India has always given importance to import pace. Further, India is building up new areas of
substitution over export promotion, which can be strength in export markets by moving to exports of
seen and analyzed from the results. pharmaceuticals, software and engineering
manufactures in addition to the traditional export
Key words: Economic Growth, Exports, Export Led strengths in gems & jewelry, textiles and primary
Growth products [NASSCOM and DGCIS (various issues)].
These events have succeeded in reducing the
Mili Saxena, Senior Lecturer, School of ideological opposition to trade which derived in part
Management Sciences, Varanasi from India’s colonial experience combined with an
E-mail: milisaxena24@yahoo.com obsession with self-sufficiency at any cost. Given
the fact that the export-to-GDP ratio in developing
countries increased from about 13.4 percent in FY
2007 to about 16.3% in 2013 (Exim bank), it
immediately becomes clear that exports have played
a major role in the growth process of developing
(23)
