Trade liberalization industrial performance and economic growth in Indian economy a cointegration analysis

Abstract

The present study is an attempt to examine the long run relationship and direction of causality between three variables viz, Trade Liberalization, Industrial Performance and Economic Growth in Indian Economy in the post reform period. It has also analysed various determinants of industrial performance and their relationship with industrial value added. Cointegration technique (ARDL model) has been used to examine the long run relationship between the variables and to test the causal links, granger causality test in a multivariate VAR framework has been used. The study has found positive correlation between industrial value added and its determinants GDP, Export, G.F.C.F, Tariff on import, Labour force, Secondary education and trade liberalization. It has also found the presence of positive relationship between trade liberalisation, industrial value added and economic growth. In the light of the conclusions, the study has suggested that the government should integrate the liberal trade policies with economic growth and development strategies, as the linkage between trade policies and development cum- industrialization strategies are very important for economic development of the country. newline