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Testing for service-led and investment-led hypothesis: evidence from 'Chindia'


Abdul Hamid, Baharom and Habibullah, Muzafar Shah and R. C., Royfaizal (2009) Testing for service-led and investment-led hypothesis: evidence from 'Chindia'. Asian Social Science, 5 (3). pp. 91-98. ISSN 1911-2017; ESSN: 1911-2025


This study examines the meaningful relationship between economic growth, and service sector contribution and domestic investment in two major Asian economies, namely India and China. Autoregressive Distributed Lag (ARDL) bounds testing procedure is employed to analyze the impact of the selected variables namely (1) contribution by the service sector, (2) (4) domestic investment on economic growth and vice versa. The period of interest is 1960-2005 using annual data. The empirical results demonstrate that for the case of India, there is (1) a unidirectional causality from domestic investment to economic growth and (2) from economic growth to services. As for China, only unidirectional causality from services sector to economic growth is detected, while no meaningful relationship was found between domestic investment and economic growth.

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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
DOI Number: https://doi.org/10.5539/ass.v5n3p91
Publisher: Canadian Center of Science and Education
Keywords: China; India; Service-led; Investment-led; Bound testing
Depositing User: Nabilah Mustapa
Date Deposited: 18 Aug 2015 10:52
Last Modified: 20 Oct 2017 08:25
Altmetrics: http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.5539/ass.v5n3p91
URI: http://psasir.upm.edu.my/id/eprint/16994
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