Growth of India’s High-tech Exports: Do the Import of Intermediate Goods and Inward FDI promote India’s High-tech Exports?

Abstract

Exports across the globe have gone through structural change which has also led to diversification of export basket of the economies around the world. At present the world is witnessing a shift towards medium and high technology exports as compared to low technology and natural resource based exports. More competency in high technology based production of goods and their and exports can be a very important key factor in the growth and development of an economy. As the high technology exports play a very crucial role in the growth and development of an economy, the present study attempts to study the growth of India’s high-tech exports and secondly to find out the impact of import of intermediate goods and inward FDI on India’s High-tech export performance. Two control variables namely R&D expenditure as a percentage of GDP and economic freedom level represented by index of economic freedom are also taken into the studying order to take up the analysis. This study uses simple and multivariate regression model for the purpose of empirical analysis. In this study, value of high-tech exports has been taken as the dependent variable and on the other hand imports of intermediate goods, inward FDI, R&D expenditure and index of economic freedom are four independent variables. Results in the study show that, Firstly, high-tech exports performance has improved over the last two decades and secondly, both import of intermediate goods and inward FDI has a significant positive impact on the growth of India’s High-tech exports.