Has globalisation reaped rewards? A fresh perspective from India Online publication date: Mon, 11-Oct-2021
by Shikha Gupta; Nand Kumar
International Journal of Information and Decision Sciences (IJIDS), Vol. 13, No. 3, 2021
Abstract: Using annual time series data from 1980-2015, the study aims to estimate the empirical relationship between India's trade, globalisation, and GDP growth. For this, ADF along with PP and KPSS techniques are used to establish stationarity. As there is evidence of cointegration, vector error correction model and DOLS estimations are used to adjudge the adjustment of variables. Wald test and Toda-Yamamoto Granger causality follow in analysis to investigate the short-run and the long-run causality, respectively. In order to assess the response path, variance decomposition and impulse response functions are created. Globalisation has a negative effect and trade bears a positive effect on economic growth. However, contrary to the perception of new growth theory, increasing trade and globalisation do not have an impact on the long-run economic growth. The novelty of the study lies in using an augmented version of KoF Index to avoid the problem of collinearity and more robust approach.
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