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This study extends the previous empirics and conducts a comprehensive analysis of the effects of terms of trade (TOT) on economic growth in the large and emerging market economy, India, which experienced tremendous transformation from a persistently low‐growth economy in the 1950s–1970s to a moderate‐growth economy in the 1980s and then to a high‐growth economy, following the onset of inclusive economic reforms from the beginning 1990s. The TOT remained unfavourable during the 1950s, witnessed boom during the mid‐1960s to the mid‐1970s, showed sharp downturn during the mid‐1970s to the mid‐1980s, and then displayed deteriorations again from the late 1990s to 2017–2018. The model estimated in one‐regime setting with no structural break and in a sample‐split setting with multiple structural breaks—over both "long" and "short" time periods—supports the presence of cointegration among variables and suggests the positive and significant long‐run effects of TOT on economic growth. The diversification of trade, the continual improvements in the quality of export products, and the development of high value‐added industries are essentially crucial to induce long‐term improvements in TOT. The improvements in TOT need to be accompanied by the development of financial sector, expansion of external trade, and acceleration of domestic investment. [ABSTRACT FROM AUTHOR]

This study surveys the literature on saving–investment (SI) correlations and international mobility of capital (IMC) generated over more than three decades since the 1980s. Several studies have shown the presence of paradoxically high SI correlations for the developed countries with observed high IMC, and low SI correlations for the developing countries with observed low IMC. The studies accounting for structural breaks in model parameters provide dominant support for the decrease in SI correlations and increase in IMC after the switch from fixed to flexible exchange rate regime and the removal of policy restrictions on capital flows. The intertemporal optimisation approach to current account and the open-economy growth and dynamic stochastic general equilibrium models mainly provide theoretical predictions and suggest that it is possible to find high SI correlations in the wake of high IMC. The increases in international capital flows have been the natural corollary of the growth of international trade in goods and services and increases in foreign direct investment flows. It is these factors, rather than international trade in capital market securities (bonds and equities) driven by the diversification benefits of financial portfolios per se, that have been the key levers of international financial flows. [ABSTRACT FROM AUTHOR]

This study examines the linkages between agriculture, industry, and services sectors, and analyses the pattern of economic growth in India. The vector autoregression model is estimated on annual data for the period 1950–1951 to 2009–2010. The results provide strong support for the long-run and a weak support for the short-run linkages among sectors. The development of rural sector is generally synonymous with the growth of agriculture and that of urban sector with the growth of manufacturing and services sectors. The services sector bypassed the successful completion of the process of industrialization, and prematurely emerged as the dominant driver and key lever of economic growth. The development strategy needs to be rebalanced to revitalize agriculture to generate rural employment, support industry, and provide the wage goods and food security. The revitalization of agriculture needs to be complemented by the development of highly productive and internationally competitive manufacturing sector to boost the manufacturing goods exports, stimulate the positive productivity spillovers, provide productive job opportunities to surplus labour in agriculture, generate urban employment, reduce underemployment and disguised unemployment in the informal sector of the urban economy, and accomplish the process of industrialization. [ABSTRACT FROM PUBLISHER]

This study examines the effects of international trade and investment on output and tests the null hypothesis of Granger non-causality among trade, investment and economic growth in Canada. The long-run model is estimated using several single-equation and system estimators to assess the robustness of results across methodologies. The single-equation, OLSEG, GMM, DOLS, NLLS and FMOLS, estimates of the model provide consistent support for the positive and significant long-run effects of exports and investment on output. The ML system estimates cross-validate the cointegrating relationship and reinforce the positive effects of exports and investment and the negative effects of imports on output. The over-parameterized level-VAR estimates suggest unidirectional Granger-causality from exports, imports and investment each to output. The estimates of the model with structural breaks support the long-run relationship, though the evidence is not unambiguous ubiquitously across all the tests. The evidence supporting the positive and significant long-run effects overwhelms the evidence providing weak or no support for the effects of trade on output. The results underline the need for the acceleration of exports (and investment) to offset the demand-reducing effects of imports and escalate the altitudes of output and economic growth. [ABSTRACT FROM AUTHOR]

This study examines the effects of international trade and investment on output and tests the Granger-causal nexus among trade, investment and economic growth in New Zealand for the period 1954-2007. The results provide consistent support for the long-run effects of trade and investment on output. The optimal single-equation and the vector autoregression-based system estimates of the model consistently suggest positive and significant long-run effects of exports and investment on output. The effects of imports on output are positive across all and statistically significant across most estimators. The Johansen test for cointegration suggests the presence of one equilibrium relationship among the model variables. The JMN test for cointegration with structural breaks provides mixed support, while the end-of-sample cointegration breakdown tests lend dominant support for cointegration among the model variables. The positive and significant long-run effects of exports and investment on output underline the need for the promotion of exports and increase in investment to foster higher levels of output and economic growth. [ABSTRACT FROM AUTHOR]

This study estimates the Self Exciting Threshold Autoregressive (SETAR) and Smooth Transition Autoregressive (STAR) models and examines the nonlinear and regime switching dynamics of economic growth for a set of 10 OECD countries. The null of linearity in SETAR model is tested using the recursive polynomial F test of Tsay and the bootstrap based supremum, average and exponential average Lagrange Multiplier (LM) tests of Hansen. The F test of Tsay rejects the null of linearity for all the countries, except Spain and Switzerland. The SETAR model of Hansen reinforces the evidence and suggests the rejection of linear model. The STAR model rejects the null of linearity against STAR nonlinearity for all the countries, except Denmark and Switzerland. The sequential F tests for the conditional nulls suggest the LSTAR nonlinearity for Australia, Belgium, France, Sweden and UK, and the ESTAR nonlinearity for Canada, Spain and the USA. [ABSTRACT FROM AUTHOR]

This study examines the effects of international trade on output and tests the null of Granger non-causality between trade and economic growth in Australia. The single-equation IV-GMM, DOLS, FMOLS and NLLS and the system-based ML estimates consistently support the positive and significant long-run effects of exports and investment on output. The effects of imports are consistently negative across all the estimates. The OLSEG, RLS and ARDL-ECM estimates provide a mixed and weak and that overparameterised level-VAR estimates no support for the effects of trade on output. The estimates of the model with structural breaks provide a dominant support for the cointegrating relationship among variables. In conclusion, the evidence supporting the positive and significant long-run effects overwhelms the evidence providing a mixed, weak or no support for the effects of trade on output. The results of the study can be inductively generalised to mimic the findings of the literature at large and to suggest that a part of the inconclusiveness over the gains of trade could analogously be ascribed to the use of different methodologies and test statistics across studies. The results support the acceleration of exports and investment to foster the higher levels of output and economic growth. [ABSTRACT FROM AUTHOR]

This study examines the long-run equilibrium and short-run dynamic relationship between services sector and Gross Domestic Product (GDP) and between services and nonservices sectors in India. The model is estimated using the optimal single-equation and the maximum-likelihood system estimators. All the estimators consistently suggest the cointegrating relationship between services sector and GDP as well as between services and nonservices sectors. The estimates of long-run elasticity parameters are statistically significant and dimensionally consistent across the estimators. The conventional Cumulative Sum (CUSUM) and the new CUSUM and Moving Sum (MOSUM) tests suggest the stability of the equilibrium residuals and reinforce the cointegrating relationship between the model series. The error correction model provides some support for unidirectional Granger-causality from services sector to GDP. The impulse response and variance decomposition analyses instead suggest the bidirectional causality between services sector and GDP and between services and nonservices sectors. The stable growth of services sector is essentially crucial to absorb the adverse effects of exogenous weather shocks in agriculture and industry and provide resilience to the economy. [ABSTRACT FROM AUTHOR]

This study surveys the literature on the relationship between international trade and economic growth, and succinctly reviews the role of GATT/WTO in fostering free trade. Most studies support the gains of trade and recognise the substantive contributions of GATT/WTO in fostering free trade; the evidence is, however, not ubiquitously unambiguous. The macroeconomic evidence provides a dominant support for the positive and significant effects of trade on output and growth, while the microeconomic evidence lends larger support to the exogenous effects of productivity on trade, as compared to the effects of trade on productivity. The GATT/WTO remains surrounded by barriers to trade and avowed preferences for preferential trade agreements. The strength of the argument for the gains of trade needs to be evaluated in juxtaposition with several methodological and measurement issues that surround the trade-growth empirics. Most studies focus on partial equilibrium analysis of trade policy and ignore the general equilibrium aspects of macroeconomic policy. It is difficult to disentangle the effects of trade policies from those of other macroeconomic policies and unequivocally interpret the observed correlations between trade policies and economic growth. Trade is one of the several catalysts of productivity and growth and hence its contribution is contingent on its weight in economic activity. [ABSTRACT FROM AUTHOR]

Abstract: This study examines the long-run effects of domestic saving on income and tests the null of non-causality between saving and growth in India. The optimal single-equation and the maximum-likelihood system estimates of the model consistently support the predictions of the neoclassical exogenous and the post-neoclassical endogenous models of economic growth, and suggest the significant long-run effects of saving on income. The innovation accounting shows the bidirectional causality between saving and growth. The stylized evidence for the steady-state effects of saving on income suggests the need to accelerate domestic saving to finance capital accumulation and foster higher income and growth. Most of the saving comes from the surplus household sector, and the deficit private corporate and public sectors draw on household saving to meet their investment requirements and finance the resource gaps. A two-pronged approach with the incentive-based measures to induce the motivation to save and the productivity-based measures to increase income and strengthen the capacity to save, would be useful to generate higher saving and reinforce the acceleration of income and growth. [Copyright &y& Elsevier]

This study examines the relationship between financial development and economic growth in India for the period 1951-52 to 1995-96. The long-run equilibrium and short-run dynamic models are estimated using financial interrelations ratio and new issue ratio as the measures of financial development, a la Goldsmith (1969). The Johansen (1991) estimator rejects the null of zero cointegrating vector and shows the presence of long-run equilibrium relationship between financial development and economic growth. The error correction model, impulse response and variance decomposition analyses (Sims, 1980), and the Toda and Yamamoto (1995) estimator show the presence of bidirectional Granger-causality between financial development and economic growth. The presence of bidirectional Granger-causality suggested by these estimators points towards the possible problem of endogeneity and simultaneity bias in the growth models that examine the contemporaneous effect of financial development on economic growth. The economic reforms that started since July 1991 emphasized on the liberalization and development of financial sector to supplement the efforts aimed at achieving high economic growth in India. [ABSTRACT FROM AUTHOR]

The article focuses on the planning regarding the introduction of technological change in Indian agriculture. The concept taken here is not the general question of application of science and scientific research in agriculture but, more specifically, to the adoption and extended use of improved tools, implements and machinery for carrying out various agricultural operations. Although a high proportion of ploughs still in use in India are wooden and on the whole the pace at which new types of ploughs, hoes, harrows, cultivators, seed drills, threshers and other implements have been adopted has been relatively slow in most regions, new drives to technological change are being increasingly felt. A study team which reviewed progress in different parts of India in respect of research, manufacture, supply and adoption of improved agricultural implements observed that agricultural institutes and research centres had not yet given adequate attention to some of the more pressing needs of farmers. Against the Indian political and social background, basic changes in the system of land management and property relationships have to be accomplished largely through consent, persuasion, demonstration and honest implementation of laws.

This study estimates the intertemporal model for the relationship between exports and imports and examines the sustainability of current account deficits (CADs) and the validity of intertemporal budget constraint for 24 Organisation for Economic Co‐operation and Development countries. The standard ordinary least squares (OLS)‐based two‐step Engle and Granger test, the cointegration regression Durbin–Watson (CRDW) test, and the Stock–Watson test performed on the one‐regime model with time‐invariant parameters and no structural break provide mixed support for the presence of cointegration between exports and imports. The recursive least squares‐based cumulative sum of recursive residuals (CUSUM) and the cumulative sum of squares of recursive residuals (CUSUMSQ) tests and the OLS‐based Andrews‐Quandt (AQ) and Andrews – Ploberger (AP) tests suggest the presence of structural breaks in the long‐run relationship between exports and imports for a number of countries. The end‐of‐sample new cointegration breakdown tests performed on the OLS, fully modified OLS, and full‐information maximum‐likelihood estimates of the model suggest the presence of cointegration between exports and imports for most countries. The dominant support for cointegration between trade flows points toward the sustainability of CADs and the validity of intertemporal budget constraint. The macroeconomic stabilization policies seem to have been effective in correcting the market failures and maintaining the steady‐state equilibrium relationship between trade flows in the sample countries. The findings of this study have important implications for empirical research. The structural breaks in the cointegrating vector could occur even over the short time periods and at any point in time. It is essentially important to assess the sustainability of the external position in the presence of long‐period as well as short‐period breaks in the cointegrating vector. [ABSTRACT FROM AUTHOR]