Determinants of India's service exports: A static and dynamic analysis

Abstract

The service exports of our country have been increasing at a rapid pace in recent years. The service exports of India as a percentage of world export of services is more than 2 precent. India is far ahead of Mexico, Turkey and Poland, other competitors in service exports. The present study made an attempt to understand the growth, structure and determinants of India's service exports. The study shows that rate of growth of service exports is much higher than that of rate of growth of exports in trade in goods, in recent years. The study also reveals that there is a structural change in India's trade in services and the share of miscellaneous services, which includes software services, is on an increase over the years. The major conclusions of the study based on static and dynamic models are:(i) The factors determining the trade in services in India are (a) trade in goods and (b) value of service sector in GDP, (ii) Trade in services show dynamic relationship only with the value of service sector GDP, and, (iii) the value of service sector GDP has a substantial influence in determining trade in services in the long-run.