Year: 2026 | Month: June | Volume 71 | Issue 2
Incorporating Factor Productivity Gains in the Relationship between Export Growth and GDP Growth: Empirical Evidences from India
Tennyson Pangambam
DOI:10.46852/0424-2513.2.2026.2
Abstract:
Taking cognizance of a rapidly globalising world, this paper attempts to determine the relationship between the “growth rate of exports” and the “growth rate of Gross Domestic Product (GDP)” by taking empirical evidences from India. The methodology of this paper leans towards a model that encapsulates the endogenous growth theory by incorporating the “growth rate of labour force” and the “growth rate of capital stock” as the independent variables in addition to the growth rate of exports. As such, this paper attempts to bring in the perspective of factor productivity gains owing to export growth and, consequently, its impact on India’s GDP growth. An annual time-series data of 30 years (1992 to 2022) is taken to conduct an in-depth analysis of how export growth has impacted GDP growth after India’s New Economic Policy of 1991. Accordingly, a multiple regression model, adjusted to make its time-series components stationary, is used. Rigorous diagnostic tests to rule out the presence of spurious regression, autocorrelation, heteroscedasticity and multicollinearity are then conducted to ensure that the estimates of the model are best linear unbiased estimators (BLUE). Diagnostic tests for model specification error and model stability are also employed. The resulting analysis confirms that export growth has a “positive significant impact” on GDP growth for India and emphasises on the role and impact of factor productivity gains in this aspect. This paper also finds that capital stock growth has not had statistically significant impact on GDP growth at the 5% level of significance. Finally, this paper also highlights the trend of jobless growth in India during the time period, 1992 to 2022.
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