Relationship between MSME Output, Exports and Economic Growth in India: An Econometric Study
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The MSME sector has emerged as a key pillar of the Indian economy, playing a vital role in the country’s economic development through its significant contributions to output, exports, and employment. This study examines the causal links between MSME output, MSME exports, total exports, and India's GDP using the Johansen-Juselius cointegration test and the Granger causality test. The Johansen-Juselius test results reveal no strong evidence of a long-term cointegrating relationship among the variables. However, the Granger causality test, based on an unrestricted VAR model with first-differenced data, identifies bidirectional causality between GDP and MSME exports and between MSME exports and total exports.
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