Services growth and globalization in India and China

Abstract

Following the breakdown of the Bretton Woods’ system, a substantial body of work has developed to understand the implications of exchange rate movements for economic growth. Of particular interest is the relationship between export performance and exchange rates, which has been extensively examined in trade literature. There is no consensus, however, on the existence of, or, direction of the effect of exchange rate movements since most empirical work until recently, was based on country-level exports and hence constrained by aggregation bias.