Cogent Economics & Finance (Dec 2024)
Exploring the drivers of Indian agricultural exports: a dynamic panel data approach
Abstract
AbstractThis study delves into dynamics and determinants of agricultural exports from India. India’s agricultural export basket is heavily reliant on a limited range of commodities, including basmati rice, buffalo meat, spices, tea, coffee, and marine products. Such concentration poses risks, making the sector vulnerable to price fluctuations, changes in global demand, and challenges in accessing specific markets. Furthermore, the declining ratio of export value to import value in recent years indicates an unfavourable trade imbalance. To address these challenges and foster sustainable growth in the agricultural export sector, policymakers must gain a comprehensive understanding about the determinants for agricultural exports. So, this study utilizes panel data encompassing 40 agricultural export items over an 11-year period. The researchers employ the system Generalized Method of Moments (GMM) estimation and the findings showed positive and significant impact of past export performance on current export decisions. Moreover, the study highlights the positive and significant influences of gross output of agriculture, value-added activities in agricultural sector, gross domestic product, trade openness, foreign direct investment, water use efficiency, corruption index and exchange rate dynamics on quantum of agricultural exports. However, higher consumer prices have a negative effect on export quantities, emphasizing the importance of price competitiveness in international markets. The findings of this study provide valuable insights for diversifying the export basket, enhancing productivity, value addition, and sustainability. Addressing challenges related to trade imbalances and price competitiveness is crucial for driving growth in India’s agricultural sector, benefiting farmers, the economy, and the nation as a whole.
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