The empirical relationship between trade openness and economic growth of India has beena debatable issue. The existing literature fails to provide an unambiguous answer. The paperexamines this empirical relationship for the time period 1970-2010 using VectorAutoregression method and demonstrates that the relationship has evolved over timefollowing the regime change in the early 1980s when the Indian economy started to movefrom a state-led growth model to a pro-market regime. Therefore, any assumption of astatic trade-growth nexus may lead to inaccurate findings. Our econometric results indicatethat growth in trade volumes accelerates economic growth of India since 1980-81 onwards.We do not find evidence of any significant association between trade barriers and growth.
|Number of pages||25|
|Journal||Journal of Academic Research in Economics|
|Publication status||Published - 1 Mar 2014|
- Trade openness
- economic growth
- time series analysis