Causality Between Export and Economic Growth: A Cause Study of India

The study investigates the relationships between export and economic growth, over the period April 2005 to March 2014. Index of industrial production is used as indicator of economic growth. Johansen’s co-integration and Granger causality test have been applied to explore the long-run & short run equilibrium relationship between export and economic growth. The analysis reveals that export and economic growth are co-integrated and, hence, a long-run equilibrium relationship exists between them. It is observed that the export and index of industrial production as indicator of economic growth are positively related to each other. The export is found to be significant in determining economic growth and economic growth significantly affects export. In the Granger causality sense, export Granger causes economic growth and economic growth Granger causes export or there is bi-directional causality between export and economic growth in both long run and short-run.