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3. They conclude that the causality from exports Data and Methodology
to GDP appears to be a short run phenomenon.
The present study is being conducted for the post
Anwer and Sampath (2001), also find evidence reform period, from the year 1991 till 2012. The data
against the ELG hypothesis for India. In contrast, is mainly secondary in nature which has been
Nidugala (2001) builds on Esfahani’s (1991) model compiled from the handbook of statistics, published
and uses an augmented production function with by the RBI.
exports as a regressor. Nidugala finds evidence in
support of the ELG hypothesis for the case of India, Following Granger (1969), the Granger-causality
particularly in the 1980s. He finds that export growth tests have been developed to check whether or not
had a significant impact on GDP growth. Further, the inclusion of past values of a variable does or does
his study reveals that growth of manufactured exports not help in the prediction of present values of
had a significant positive relationship with GDP variable. In order to avoid spurious causality both
growth, while the growth of primary exports had no of the variables under consideration need to be
such influence. stationary. According to Granger (1988), standard
tests for causality are valid only if there exits co
Ghatak and Price (1997) test the ELG hypothesis for integration. Therefore, the time series properties of
India for the period 1960-1992. Their results indicate each variable are examined by unit root tests, i.e it
that real (aggregate) export growth is Granger-caused is tested whether exports and GDP are integrated of
by non-export real GDP growth in India over 1960- order zero. This is accomplished by performing the
92. Their co integration tests confirm the long run augmented Dickey-Fuller (ADF) test (table 1).
nature of this relationship. However, imports do not
appear to be important for the case of India. Once the stationary is checked, the Granger test of
causality can be applied to check the causality
From the above literature, it is apparent that all the between GDP and exports. This test assumes that
studies have simply focused on the relationship information relevant to the prediction of the
between exports and economic growth, not on the respective variable, GDP and Export, is contained
mechanism of Export- Led Growth (ELG) model. solely in the time series data on these variables. The
test involves estimating the following regressions:
Objectives of the study
GDPt = Ó ái X t-i + Ó âj GDPt-j+ì1t
The study was conducted with the following ……………………..(i)
objectives:
Xt = Ó ëi X t-i + Ó äj GDP t-j +
1. To investigate the causal relationship ì2t………………………(ii)
between exports and economic growth in the
post-reform period, in the context of India. where i = 1, 2…………n and j = 1, 2…………n
2. Whether the export- led growth mechanisms Where it is assumed that disturbances ì1t and ì2t are
is true with respect to India or not. uncorrelated. Equation (i) postulates that that the
current GDP is related to past values of GDP itself
as well as of Export, and the second equation (ii)
postulates a similar behavior of Exports.
(25)
to GDP appears to be a short run phenomenon.
The present study is being conducted for the post
Anwer and Sampath (2001), also find evidence reform period, from the year 1991 till 2012. The data
against the ELG hypothesis for India. In contrast, is mainly secondary in nature which has been
Nidugala (2001) builds on Esfahani’s (1991) model compiled from the handbook of statistics, published
and uses an augmented production function with by the RBI.
exports as a regressor. Nidugala finds evidence in
support of the ELG hypothesis for the case of India, Following Granger (1969), the Granger-causality
particularly in the 1980s. He finds that export growth tests have been developed to check whether or not
had a significant impact on GDP growth. Further, the inclusion of past values of a variable does or does
his study reveals that growth of manufactured exports not help in the prediction of present values of
had a significant positive relationship with GDP variable. In order to avoid spurious causality both
growth, while the growth of primary exports had no of the variables under consideration need to be
such influence. stationary. According to Granger (1988), standard
tests for causality are valid only if there exits co
Ghatak and Price (1997) test the ELG hypothesis for integration. Therefore, the time series properties of
India for the period 1960-1992. Their results indicate each variable are examined by unit root tests, i.e it
that real (aggregate) export growth is Granger-caused is tested whether exports and GDP are integrated of
by non-export real GDP growth in India over 1960- order zero. This is accomplished by performing the
92. Their co integration tests confirm the long run augmented Dickey-Fuller (ADF) test (table 1).
nature of this relationship. However, imports do not
appear to be important for the case of India. Once the stationary is checked, the Granger test of
causality can be applied to check the causality
From the above literature, it is apparent that all the between GDP and exports. This test assumes that
studies have simply focused on the relationship information relevant to the prediction of the
between exports and economic growth, not on the respective variable, GDP and Export, is contained
mechanism of Export- Led Growth (ELG) model. solely in the time series data on these variables. The
test involves estimating the following regressions:
Objectives of the study
GDPt = Ó ái X t-i + Ó âj GDPt-j+ì1t
The study was conducted with the following ……………………..(i)
objectives:
Xt = Ó ëi X t-i + Ó äj GDP t-j +
1. To investigate the causal relationship ì2t………………………(ii)
between exports and economic growth in the
post-reform period, in the context of India. where i = 1, 2…………n and j = 1, 2…………n
2. Whether the export- led growth mechanisms Where it is assumed that disturbances ì1t and ì2t are
is true with respect to India or not. uncorrelated. Equation (i) postulates that that the
current GDP is related to past values of GDP itself
as well as of Export, and the second equation (ii)
postulates a similar behavior of Exports.
(25)
