Export-led-growth Hypothesis: Further Econometrics Evidence from India

Over the last three decades the role of export in the process of economic growth has been the subject of debate among economists. The recent policy of liberalization, privatization and globalization and growth process of developed and developing countries further helped fuel this debate. The main questions in this debate are whether an outward oriented trade policy is preferable to an inward oriented trade policy in stimulating economic growth. There are two types of hypothesis that are build up in this debate: Export-led Growth (ELG) hypothesis and Growth-led Export (GLE) hypothesis. This paper investigates the relationship between GDP and exports in India for the period of 1980–2009. To achieve the objective of this study, Granger Causality Test has been applied. The test results support that there is bilateral causality between GDP and exports. This study suggests that export promotion policy is pursued consistently with an emphasis on inclusive and sustainable growth. This study supports the view that export is an engine of growth.