Monday, June 4, 2012

Export of Services: Indian Experience in Perspective

NIPFP Working Paper 102

Barry Eichengreen and Poonam Gupta
March 2012


We survey India’s experience with exporting services. We show that its experience is unique in that modern tradable services are a significantly larger share of GDP than in other countries at comparable levels of economic development. This has not always been the case, however: India’s out-performance is limited to recent years. Policy initiatives, from trade reform to liberalization of domestic industrial and service sectors, were important for jump-starting the process. Regression analysis of a cross section of countries points to the importance of a range of additional factors: overall economic development, communications infrastructure, access to foreign technology, and spillovers between the merchandise and service exports. Importantly, however, these factors, jointly or individually, do not eliminate Indian exceptionalism. Not only is India a significant outlier but it becomes more so as the period proceeds.