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Impact of Selected Macroeconomic Determinants on Economic Growth in India: An Empirical Study

Impact of Selected Macroeconomic Determinants on Economic Growth in India: An Empirical Study Due to the socio-economic, infrastructural and governance peculiarities, identification of key macroeconomic factors determining the economic growth in developing countries becomes a complicated case. The present study attempts to assess the impact of foreign aid, government consumption expenditure, foreign direct investment, trade openness, exchange rate, human capital development, and inflation on economic growth in India by using yearly data for the period of 46 years, that is, from 1971 to 2016. An autoregressive distributed lag (ARDL) bounds model enables to examine the short-run and long-run impact of selected determinants on economic growth during the study period. The outcomes of the study find that in the long run, foreign aid, the government’s final consumption expenditure and foreign direct investment have a positive and significant impact on economic growth, whereas, economic growth has been negatively influenced by exchange rate and human capital development. Contrary to the long run, foreign aid has a negative and significant impact on economic growth in the short run. The short-run outcomes show that all the selected macroeconomic determinants have either negative or positive influence on economic growth. To ensure the long-run economic growth, besides regulating the exchange rate fluctuations, policies related to export -import and human capital development need to be re-examined. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Vision SAGE

Impact of Selected Macroeconomic Determinants on Economic Growth in India: An Empirical Study

Vision , Volume 22 (4): 11 – Dec 1, 2018

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References (82)

Publisher
SAGE
Copyright
© 2018 Management Development Institute
ISSN
0972-2629
eISSN
2249-5304
DOI
10.1177/0972262918803173
Publisher site
See Article on Publisher Site

Abstract

Due to the socio-economic, infrastructural and governance peculiarities, identification of key macroeconomic factors determining the economic growth in developing countries becomes a complicated case. The present study attempts to assess the impact of foreign aid, government consumption expenditure, foreign direct investment, trade openness, exchange rate, human capital development, and inflation on economic growth in India by using yearly data for the period of 46 years, that is, from 1971 to 2016. An autoregressive distributed lag (ARDL) bounds model enables to examine the short-run and long-run impact of selected determinants on economic growth during the study period. The outcomes of the study find that in the long run, foreign aid, the government’s final consumption expenditure and foreign direct investment have a positive and significant impact on economic growth, whereas, economic growth has been negatively influenced by exchange rate and human capital development. Contrary to the long run, foreign aid has a negative and significant impact on economic growth in the short run. The short-run outcomes show that all the selected macroeconomic determinants have either negative or positive influence on economic growth. To ensure the long-run economic growth, besides regulating the exchange rate fluctuations, policies related to export -import and human capital development need to be re-examined.

Journal

VisionSAGE

Published: Dec 1, 2018

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