Factors determining India's export performance

Export growth in India has been much faster than GDP growth over the past few decades. Several factors appear to have contributed to this phenomenon including foreign direct investment (FDI). However, despite increasing inflows of FDI especially in recent years there has not been any attempt to assess its contribution to India's export performance'one of the channels through which FDI influences growth. Using annual data for 1970'1998 this paper investigates the determinants of India's export performance in a simultaneous equation framework. Results suggest that the real appreciation of the rupee adversely effects India's export performance. Export supply is positively related to the domestic relative price of exports while the higher domestic demand reduces export supply. Foreign investment appears to have statistically no significant impact on export performance although its coefficient has a positive sign.