Trade in services has made phenomenal strides in the globalisation era with the advent of a technology revolution, fragmentation in production processes and rapid digitisation. The case of India has been exemplary, as she bypasses her sluggish growth in goods exports to emerge as a world leader in commercial services. By churning out positive net exports since 2003, this trade sector has considerably eased the country’s unfavourable current-account position. Further, the relatively robust performance of the country’s service exports in the face of the Great Recession of 2008–2009 has ignited speculations over its suitability as an instrument of sustainable economic growth. Though the stupendous growth of India’s export of services is well documented, not much has been said regarding consistency in this growth. Our study identifies that against the backdrop of key macroeconomic developments, the growth performance of the country’s real export of services has undergone vivid variations. The long-term trend of these exports, though increasing, is choppy. We identify three structural regimes in the course of these exports: 1975–1993, 1994–2004 and 2005–2018. We conscientiously deduce that the phenomenal growth of real service exports that accrued in the 1990s has been slowly wearing out post 2005. The slowdown has both cyclical and structural elements to it and corresponds to the changing cyclicality of service exports, subduing demand, slowing global value chains (GVCs) and post-crisis mood of protectionism.
AguiarM., & GopinathG. (2007). Emerging market business cycles: The cycle is the trend. Journal of Political Economy, 115(1), 69–102.
2.
AnandR., ChengC. K., RehmanS., & ZhangL. (2014). Potential growth in emerging Asia (Working Paper). IMF.
3.
AriuA. (2016). Crisis-proof services: Why trade in services did not suffer during the 2008–2009 Collapse. Journal of International Economics, 98, 138–149.
4.
AriuA., HakkalaK. N., JensenJ. B., & TamminenS. (2019). Service imports, workforce composition, and firm performance: Evidence from Finnish Microdata (Working Paper No. 26355). NBER.
5.
AroraA. (2006, December). The Indian software industry and its prospects. https://ssrn.com/abstract=964457 or http://dx.doi.org/10.2139/ssrn.964457
6.
AthreyaS. (2005a). The Indian software industry and its evolving service capability. Industrial and Corporate Change, 14(3), 393–418.
7.
AthreyeS. (2005b). The Indian software industry. In AroraA. & GambardellaA. (Eds.), From underdogs to tigers: The rise and growth of the software industry in Brazil, China, India, Ireland, and Israel (pp. 7–40). Oxford University Press.
8.
BaiJ., & PerronP. (1998). Estimating and testing linear models with multiple structural changes. Econometrica, 66(1), 47–78.
9.
BaiJ., & PerronP. (2003). Critical values for multiple structural change tests. The Econometrics Journal, 6(1), 72–78.
10.
BeveridgeS., & NelsonC. (1981). A new approach to time series decomposition of economic time series into permanent and transitory components with particular attention to measuring of business cycles. Journal of Monetary Economics, 7(2), 151–174.
11.
BorchertI., & MattooA. (2010). The crisis-resilience of services trade. The Service Industries Journal, 30(13), 2115–2136.
12.
CeglowskiJ. (2017). Unpacking services trade during the Great Trade. Review of World Economics, 153, 457–486.
13.
ChandaR. (2017). Impact of protectionist policies of major economies on Indian economy. IIM Bangalore.
14.
ConstantinescuC., MattooA., & RutaM. (2005). The global trade slowdown: Cyclical or structural? (Working Paper). IMF.
15.
DasA., BangaR., & KumarD. (2011). Global economic crisis: Impact and restructuring of the services sector in India (Working Paper Series). ADBI.
16.
DossaniR., & KenneyM. (2006). The next wave of globalization: Relocating service provision to India (Working Papers WP-2006-02). Industry Studies Association.
17.
EichengreenB., & GuptaP. (2013). Exports of services: Indian experience in perspective. Indian Growth and Development Review, 6(1), 35–60.
18.
HarveyA. C. (1985). Trends and cycles in macroeconomic time series. Journal of Business & Economic Statistics, 3(3), 216–227.
19.
HodrickR. J., & PrescottE. C. (1980). Postwar U.S. business cycles: An empirical investigation. (Discussion Paper). Carnie Mellon University.
20.
HoekmanB. (1995). Tentative first steps: An assessment of the Uruguay round agreement on services (Discussion Paper No. 1150). CEPR.
21.
HueserC., & MattooA. (2017). Services trade and global value chains. In OrganisationW. T. (Ed.), Measuring and analyzing the impact of GVCs on economic development (pp. 141–159). World Bank Group.
22.
KumarR., & PankajV. (2011). Crisis, imbalances and India (Working Paper Series). ADBI.
23.
KwiatkowskiD., PhillipsP. C., SchmidtP., & ShinY. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root. Journal of Econometrics, 54(1–3), 159–178.
24.
LeeJ., & StrazicichM. C. (2003). Minimum Lagrange multiplier unit root test with two structural breaks. The Review of Economics and Statistics, 85(4), 1082–1089. [Faculty Bibliography 2000s.]
25.
MukherjeeA., & GoyalT. M. (2013). FDI in services and India. Foreign Trade Review, 413–430. https://ideas.repec.org/p/ess/wpaper/id12769.html
26.
MukherjeeA., & KapoorA. (2017). India and trade facilitation in services (TFS) agreement: Concerns and way, forward (Working Paper No. 347). ICRIER.
27.
NagarajR. (2013). India’s dream run, 2003–08. Economic and Political Weekly, 48(Special Issue). https://www.epw.in/journal/2013/20/special-articles/indias-dream-run-2003-08.html
28.
NayyarD. (1987). India’s export performance, 1970–85: Underlying factors and constraints. Economic and Political Weekly, 22(19/21), 19–21.
29.
NelsonC., & KangH. (1981). Spurious periodicity in inappropriately Detrended time series. Econometrica, 49(3), 741–751.
30.
NelsonC., & PlosserC. (1982). Trends and random walks in macroeconomic time series: Some evidences and implications. Journal of Monetary Economics, 10(2), 139–162.
31.
OECD (2014). India policy brief. https://www.oecd.org/india/Encouraging-Greater-International-Investment-in-India.pdf
32.
PanargariyaA. (2004). India’s trade reforms. India Policy Forum. https://www.brookings.edu/wp-content/uploads/2016/07/2004_panagariya.pdf
33.
PandeyR., PatnaikI., & ShahA. (2018). Business cycle measurement in India (Working Paper Series). NIPFP.
34.
ParthasarathiA. (2018, January21). Oil shock and surprise. Frontline. https://frontline.thehindu.com/the-nation/oil-shock-and-surprise/article10055609.ece
35.
PatnaikI., & PunditM. (2014). Is India’s long-term trend growth declining? (Economics Working Paper Series). ADB.
36.
PerronP., & WadaT. (2009). Let’s take a break: Trends and cycles in US Real GDP. Journal of Monetary Economics, 56(6), 749–765.
37.
RoyS. (2020). Intermediate input imports, domestic input use and firm-level outcomes: Evidence from survey data. Foreign Trade Review, 55(3), 320–336.
38.
ShomeP. (2012). Rebalancing and structural policies—An Indian perspective. Oxford Review of Economic Policy, 28(3), 587–602.
39.
SubramanianA., & FelmanJ. (2019). India’s great slowdown: What happened? What’s the way out? (Faculty Working Paper No. 370). CID.
40.
UNCTAD (2004). Exports of services and economic growth in developing countries. United Nations Conference on Trade and Development.
41.
World Bank (2020). World Bank report: Trading for development in the age of global value chains. https://www.worldbank.org/en/publication/wdr2020
42.
World Trade Organisation (2019a). World trade report: The future of service trade. https://www.wto-ilibrary.org/trade-monitoring/world-trade-report-2019_7e6f8c91-en
43.
World Trade Organisation (2019b). World trade statistical review. https://www.wto.org/english/res_e/statis_e/wts2020_e/wts20_toc_e.htm
44.
ZarnowitzV., & OzyildirimA. (2002). Time series decomposition and measurement of business cycles, trends and growth cycles (Working Paper No. 8736). NBER.
