Financial development, trade openness and growth in India

• Main Authors: Raghutla CHANDRASHEKAR, T. SAMPATH, Krishna Reddy CHITTEDI
• Format: Article
• Language: English
• Published: General Association of Economists from Romania 2018-03-01
• Series: Theoretical and Applied Economics
• Subjects: financial development; trade openness; economic growth; co-integration; India
• Online Access: http://store.ectap.ro/articole/1323.pdf

This paper studies the relationship between the financial development, trade openness and economic growth in India. The Phillips-Perron (PP) test is used to check the order of integration of the variables. We apply both Johansen co-integration and Granger causality methodologies for a long run relationship and the direction of the Causality between the variables. Our findings confirm that there exist the long run relationship among financial development, trade openness, and growth. Results also support the idea that country may experience faster per-capita growth with a growing degree of trade openness through gains in country productivity associated with capital accumulation. Finally, the direction of the causality results followed mixed.