Dynamics Between Sustainable Economic Development and Macro-Economic Variables: Indian Evidence
This paper examines the relationships among selected macro-economic variables such as GDP, GCI, GCNI, SSI, CDI, CPI, and HDI from 2001 to 2022. Utilizing multiple regression analysis, the ARIMA model, co-integration, and causality techniques, the research finds a decreasing trend in economic growth over the coming years. There is a long-run equilibrium relationship among the variables, along with short-run uni-directional relationships among a few variables. The forecasted values of these macroeconomic variables, projected from the base year 2018 up to 2025, indicate that while economic growth (GDP) gradually declines, the other variables show a slow but not significant increase. This suggests that adverse economic growth may hinder the remarkable performance of other variables.
© 2024 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.
Roy, S. (2024). Dynamics between sustainable economic development and macro-economic variables: Indian evidence. Journal of Applied Economic Sciences, Volume XIX, Summer, 2(84), 179 – 199. https://doi.org/10.57017/jaes.v19.2(84).06
[1] Akbar, K. (2011). Relationship between GDP and human development indices in India. Society for Interdisciplinary Business Research (SIBR) 2011 Conference on Interdisciplinary Business Research, 1-9. http://ssrn.com/abstract=1867887
[2] Absalyamova, S., Absalyamov., Khusnullova, A., & Mukhametgalieva, C. (2016). The impact of corruption on the sustainable development of human capital, 5th International Conference on Mathematical Modelling in Physical Sciences (IC-Square 2016) IOP Publishing Journal of Physics: Conference Series 738 (2016) 012009. https://doi.org.10.1088/1742-6596/738/1/012009
[3] Ali, A. A., Ali, S. Y. A., & Dalmar, S. M. (2018). The impact of imports and exports performance on the economic growth in India. International Journal of Economics and Finance, 10(1), 110-119. http://dx.doi.org/10.5539/ijef.v10n1p110
[4] Ali, H., Qingshi, W., Ullah, I., & Ali, Z. (2017). How terrorism affects FDI in Pakistan? International Journal of Economics and Financial Issues, 7(3), 625-631. https://dergipark.org.tr/en/download/article-file/365442
[5] Absalyamova, S., Absalyamova, T., Khusnullova, A., & Mukhametgalieva, C. (2016). The impact of corruption on the sustainable development of human capital. Journal of Physics: Conference Series, 738(2016) 012009, https://doi.org/10.1088/1742-6596/738/1/012009
[6] Abdalla, I., & Murinde, V. (1997). Exchange rate and stock price interaction in emerging financial markets: evidence on India, Korea, Pakistan and Philippines. Applied Financial Economics, 7, 25-35. http://dx.doi.org/10.1080/096031097333826
[7] Abraham, W. T., & Ahmed, A. U. (2011). Economic growth and HDI in Nigeria: An error correction model approach. International Journal of Administration and Development Studies, 2(1), 239-254. https://www.researchgate.net/publication/269518608
[8] Brown, L. R., Durbin, J., & Evans, M. J. (1975). Techniques for testing the constancy of regression relationship over time. Journal of the Royal Statistical Society, 37(2), 149-192.
[9] Bahmani, O. M., Mohtadi, H., & Shabsigh, G. (1991). Exports, growth and causality in LDCs: A re-examination. Journal of Development Economics, 36(2), 405-415. https://doi.org/10.1016/0304-3878(91)90044-V
[10] Bhattacharya, B., & Mukherjee, J. (2003). Causal relationship between stock market and exchange rate, foreign exchange reserves and value of trade balance: A case study for India. The 5th annual conference on money and finance in the Indian economy on January 2003, 1-24. Igidr.ac.in/conf/oldmoney/mfc_5/basabi.pdf
[11] Bahmani, O. M., & Rhee, H. J. (1997). Are exports and imports of Korea co-integrated? International Economic Journal, 11(1), 109-114. Tandfonline.com/doi/abs/10.1080/10168739700000007
[12] Christopher, A. S. (1980). Macroeconomics and reality. Econometrica, 48(1), 1-48. https://doi.org/10.2307/1912017
[13] Sims, C. A., Stock[S1] , J. H., & Watson, W. M. (1990). Inference in linear time series models with some unit roots. Econometrica, 58(1), 113-114. https://www.princeton.edu/~mwatson/papers/Sims_Stock_Watson_ Ecta_1990.pdfhttps://www.princeton.edu/~mwatson/papers/ Sims_Stock_Watson_Ecta_1990.pdf
[14] Cinar, M. (2017). The effects of terrorism on economic growth: Panel data approach. Zb. Rad. Ekon. Fak. Rij, 35(1), 97-121. http://dx.doi.org/10.18045/zbefri.2017.1.97
[15] Engle, R. F., & Granger, C. W. J. (1987). Co-integration and error correction: Representation, estimation and testing. Econometrica, 55, 251-276.https://doi.org/10.2307/1913236
[16] Elbeydi, K. R., Hamuda, A. M., & Gazda, V. (2010). The relationship between export and economic growth in Libya Arab Jamahiriya. Theoretical and Applied Economics, 1(1), 69. https://www.researchgate.net/publication/46567573
[17] Estrada, R. A. M., Park, D., & Khan, A. (2018). The impact of terrorism on economic performance: The case of Turkey. Economic Analysis and Policy, 60, 78-88. https://doi.org/10.1016/j.eap.2018.09.008
[18] Evans, O., & Kelikume, I. (2018). The impact of poverty, unemployment, inequality, corruption and poor governance on Niger delta militancy, Boko Haram terrorism and Fulani Herdsmen attacks in Nigeria. International Journal of Management, Economics and Social Science, 8(2), 58-80. https://doi.org.10.32327/IJMESS/8.2.2019.5
[19] Fang, W., & Millar, S. M. (2002). Currency depreciation and Korean stock market performance during the Asian financial crisis. Working paper 2002-30, University of Connecticut. RePec: aic:revebs:y:2020:j:26:roys
[20] Fhima, F., Nouira, R., & Sekkat, K. (2023). How does corruption affect sustainable development? A threshold non-linear analysis. Economic Analysis and Policy, 78, 505-523. https://doi.org/10.1016/j.eap.2023.03.020
[21] Granger, C. W. J. (1981). Some properties of time series data and their use in econometric model specification. Journal of Econometrics, 16(1), 121-130. https://econpapers.repec.org/article/eeeeconom/ v_3a16_3ay_3a1981_3ai_3a1_3ap_3a121-130.html
[22] Granger, C. W. J., Huangb, N. B., & Wang, J. (2000). A bivariate causality between stock prices and exchange rates: Evidence from recent Asia flu. The Quarterly Review of Economics and Finance, 40(3), 337-354. http://dx.doi.org/10.1016/S1062-9769(00)00042-9
[23] Herzer, D., & Nunnenkamp, P. (2015). Income inequality and health: Evidence from developed and developing countries, Economics E-Journal, 9, 1-57. https://doi.org/10.5018/economics-ejournal.ja.2015-4
[24] Johansen, S. (1988). Statistical analysis of co-integration vectors. Journal of Economic Dynamics and Control, 12, 231-254. http://dx.doi.org/10.1016/0165-1889(88)90041-3
[25] Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inferences on co-integration with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169-210. https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1468-0084.1990.mp52002003.x
[26] Kim, K. H. (2003). Dollar exchange rate and stock price: evidence from multivariate co-integration and error correction model. Review of Financial Economics, 12(3), 301-313. https://doi.org/10.1016/S1058-3300(03)00026-0
[27] Kundu, A. (2013). Bi-directional relationships between exports and growth: A panel data approach. Journal of Economics and Development Studies, 1(1), 10-23. https://jeds.thebrpi.org/journals/jeds/ Vol_1_No_1_June_2013/2.pdf
[28] Kechagia, P., & Theodore, M. (2017). FDI and terrorism in the developing Asian countries: A panel data analysis, MPRA Paper 80945, University Library of Munich, Germany, 1-17. mpra.ub.uni-muenchen.de/80945/1/MPRA_paper_80945.pdf
[29] Sampathkumar, T., & Rajeshkumar, S. (2016). Causal relationship between export and Economic growth: evidence from SAARC countries. IOSR Journal of Economics and Finance, 7(3), 32-39. https://www.iosrjournals.org/iosr-jef/papers/Vol7-Issue3/Version-1/F0703013239.pdf
[30] Lonska, J., & Boronenko, V. (2015). Rethinking competitiveness and human development in global comparative researches. Procedia Economics and Finance, 23, 1030-1036. http://creativecommons/license/by-nc-nd/4.0/
[31] Muhammad, N., & Rashid, A. (2002). Stock prices and exchange rates: Are they related? Evidence from South Asian countries. The Pakistan Development Review, 41(4), 535-550. https://file.pide.org.pk/pdf/PDR/2002/Volume4/535-550.pdf
[32] Mehrara, M., & Firouzjaee, B. A. (2011). Granger causality relationship between export growth and GDP growth in developing countries: Panel co-integration approach. International Journal of Humanities and Social Science, 1(16), 223-231. https://ijhssnet.com/journals/Vol_1_No_16_November_2011/25.pdf
[33] Maja, N. R. (2018). Terrorism as a determinant of attracting FDI in tourism: Panel analysis. Sustainability, 10(12), 4553, 1-17. https://doi.org/10.3390/su10124553
[34] Paulsen, J., & Tjostheim, D. (1985). On the estimation of residual variance and order in autoregressive time series. Journal of Royal Statistical Society, 47(2), 216-228. https://doi.org/10.1111/J.2517-6161.1985.TB01348.X
[35] Pradhan, P. R., Arvi, B. M., Nair, S. M., & Bennett, E. S. (2021). Sustainable economic development in India: The dynamics between financial inclusion, ICT development, and economic growth. Technological Forecasting and Social Change, 169, 1-19. https://doi.org/10.1016/j.techfore.2021.120758
[36] Roll, R., & Ross, S. A. (1980). An empirical investigation of the arbitrage pricing theory. The Journal of Finance, XXXV(5), 1073-1103. https://doi.org/10.1111/j.1540-6261.1980.tb02197.x
[37] Ramos, F. F. R. (2001). Exports, imports and economic growth in Portugal: evidence from causality and co-integration analysis. Economic Modelling, 18(4), 613-623. http://dx.doi.org/10.1016/S0264-9993(00)00055-9
[38] Ranis, G. (2004). Human development and economic growth. Economic Growth Centre, Yale University, 1-15. http://www.econ.Yale.edu/egcenter/research.html
[39] Raj, J., Gupta, V., & Shrawan, A. (2024). Interlinkages between economic growth and human development in India: A state level analysis. Indian Public Policy Review, 5(1), 113-155. https://doi.org/10.55763/ippr.2024.05.01.003
[40] Ranis, G., Stewart, F., & Ramirez, A. (2000). Economic growth and human development, World Development, 28(2), 197-219. https://doi.org/10.1016/S0305-750X(99)00131-X
[41] Raju, G. (2018). Exports, imports and economic growth in India: Evidence from cointegration and causality analysis, Theoretical and Applied Economics, XXV (2.615), 221-230. store.ectap.ro/articole/1340.pdf
[42] Stock, H.H., & Watson, M.W. (1988). Testing for common trends. Journal of the American Statistical Association, 83, 1097-1107. https://www.princeton.edu/~mwatson/papers/Stock_Watson_JASA_1988.pdf
[43] Stavarek, D. (2005). Stock prices and exchange rates in the EU and the United States: Evidence on their mutual interactions. Czech Journal of Economics and Finance, 55(3-4), 141-161. http://ideas.repec.org/a/fau/fauart/v55y2005i3-4p141-161.html
[44] Sin, C. Y., & White, H. (1996). Information criteria for selecting possibly mis-specified parametric models, Journal of Econometrics, 71(1-2), 207-225.https://doi.org/10.1016/0304-4076(94)01701-8
[45] Saaed, A. A. J., & Hussain, M. A. (2015). Impact of exports and imports on economic growth: evidence from Tunisia. Journal of Emerging Trends in Economics and Management Sciences, 6(1), 13-21. https://www.scholarlinkinstitute.org/jetems/articles/Impact%20of%20Exports%20and%20Imports.pdf
[46] Seo, H. M., & Shin, Y. (2016). Dynamic panels with threshold effect and endogeneity. Journal of Econometrics, 195(2), 169-186. https://doi.org/10.1016/j.jeconom.2016.03.005
[47] Terfa, A. W. (2012). Testing the relationship between government revenue and expenditure: Evidence from Nigeria. International Journal of Economics and Finance, 4911, 172-82. https://doi.org.10.5539/ijef.v4n11p172
[48] Teker, S., & Guner, A. (2016). Whether development indices affect economic growth: A cross-country analysis. Procedia Economics and Finance, 38, 340-346. www.elsevier.com/licate/procedia
[49] Wooldridge, M. J. (2009). Econometric analysis of cross section and panel data. The MIT Press, Cambridge, Massachusetts London, England, 3-741. https://ipcig.org/evaluation/apoio/Wooldridge%20-%20Cross-section%20and%20Panel%20Data.pdf
[50] Xia, R., Liang, T., Zhang, Y., & Wu, S. (2012). Is global competitiveness index a good standard to measure economic growth? A suggestion for improvement. International Journal of Services and Standards, 8(1), 44-57. http://dx.doi.org/10.1504/IJSS.2012.048438