Globalization Versus Slowbalization: A Perspective on the Indian Economy

Abstract

The crisis and ensuing recession have led the global leaders to focus inwards. While the trend had taken off with countries having to face rising inequality and a focus towards self-development, there is little evidence besides newspaper articles to support this hypothesis from the Indian perspective. The results, using dynamic hierarchical factor model analysis, over a subset of 21 economies which account for 66% of India’s trade, reveal that India’s globalization has been withering away over time. Using time-varying parameter regression estimation on the domestic and factors loading, it is observed that the portion of growth explained by domestic factors is increasing over time and that of foreign factors is degrading. The study provides evidence of slowbalization in Indian economy. As the government looks forward to an era of self-reliance and Make in India, the results hold significance for the future growth trajectory of the Indian economy.