ESRI Discussion Paper Series No.338
India in the World Economy: Inferences from Empirics of Economic Growth

Takahiro Sato
Visiting Research Fellow, Economic and Social Research Institute, Cabinet Office
Professor, Research Institute for Economics and Business Administrations (RIEB), Kobe University

Abstract

The aim of this study is to investigate the growth experiences of India in relation to the experiences of around one hundred countries in the world during the last half-century by exploiting the inferences drawn from the cross-country growth regressions. This study obtains the following findings. First, the outcome of growth regression supports the conditional convergence hypothesis. In contrast, both India's growth rate and income level have increased, breaking the convergence hypothesis. Second, the growth regression shows life expectancy at birth, investment ratio and external openness contributes to economic growth. In India these three were improved. Third, the growth regression suggests human capital has a non-linear effects on economic growth and that the schooling years beyond 3 years raise the growth rate. In India both schooling years and growth rate have increased. Fourth, the growth regression shows that total fertility rate has a negative effect on the growth. In India the growth rate increased as the total fertility rate declined. Fifth, the growth regression shows that government consumption reduces the growth rate. Contrary to the regression results both India's growth rate and government consumption have increased. Sixth, the growth regression suggests inflation has a negative effect on growth rate. However, there are no clear relationship between inflation and growth in India. Seventh, the growth regression shows the improvement of terms of trade contributes to economic growth. The same was observed in India where terms of trade fluctuated over time. Finally the growth regression supposes that democracy and economic growth have a non-linear complex relationship and that the relationship differs depending on the position of the distribution of growth rates.There are no clear relationship between democracy and growth in India where the India's status of democracy has hardly varied.

  • JEL classification: O11, O47, O53
  • Key words: economic growth, growth regression, India.

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  2. 1ページ
    Abstract
  3. 2ページ
    1. Introduction
  4. 2ページ
    2. Economic Growth Model as a Theoretical Benchmark
  5. 4ページ
    3. Growth Experience of India from Inferences of Growth Regression
    1. 4ページ
      3.1. Absolute versus Conditional Convergences
    2. 5ページ
      3.2 Urbanization and Economic Growth
    3. 7ページ
      3.3 Basic Growth Regression
    4. 13ページ
      3.4 Robustness of Basic Growth Regression
  6. 14ページ
    Concluding Remarks
  7. 16ページ
    References
  8. 20ページ
    Figure
    1. 20ページ
      Figure 1 The Dynamics of the Neoclassical Growth Model
    2. 21ページ
      Figure 2 Absolute Convergence in the Neoclassical Growth Model
    3. n
      22ページ
      Figure 3 Conditional Convergence in the Neoclassical Growth ModelPanel A: Different Saving Rates
    4. 23ページ
      Figure 4 Simple correlation between the growth rate of per capita GDP and log of initial per-capita GDP.
    5. 24ページ
      Figure 5 Partial relation between the growth rate of per-capita GDP and log of initial per capita GDP.
    6. 25ページ
      Figure 6 Partial relation between the growth rate of per-capita GDP and upper-level schooling years.
    7. 26ページ
      Figure 7 Partial relation between the growth rate of per-capita GDP and inverted value of life expectancy at birth.
    8. 27ページ
      Figure 8 Partial relation between the growth rate of per-capita GDP and total fertility rate.
    9. 28ページ
      Figure 9 Partial relation between the growth rate of per-capita GDP and government consumption to GDP.
    10. 29ページ
      Figure 10 Partial relation between the growth rate of per-capita GDP and investment to GDP.
    11. 30ページ
      Figure 11 Partial relation between the growth rate of per-capita GDP and inflation rate.
    12. 31ページ
      Figure 12 Partial relation between the growth rate of per-capita GDP and change in terms of trade.
    13. 32ページ
      Figure 13 Partial relation between the growth rate of per-capita GDP and external openness ratio.
    14. 33ページ
      Figure 14 Partial relation between the growth rate of per-capita GDP and democracy index.
    15. 34ページ
      Figure 15 Growth Rates during 1960–2010
  9. 35ページ
    Table
    1. 35ページ
      Table 1 Descriptive Statistics and Expected Sign of Growth Regression
    2. 36ページ
      Table 2 Data for China and India
    3. 37ページ
      Table 3 Regression for annual growth rate of per capita GDP
    4. 38ページ
      Table 4 Fixed-effect regression for annual growth rate of per capita GDP
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