ANALYZING TRADE-GROWTH RELATIONSHIP BETWEEN INDIA AND THE NETHERLANDS USING ARDL MODEL

Trade between India and the Netherlands has consistently grown and reached to touch an all-time high of USD 27.58 billion in the year 2022-23. Both sides have invested immense political capital to strengthen their economic partnership to achieve a win-win in pursuit of their self-interests. For India, the Netherlands is the gateway to Europe and the Netherlands views India as a big market and a safe investment destination. In line with the China plus one strategy, Dutch investments continue to grow in India which further boost economic relationship between Indian and Dutch corporates. With the potential to further strengthen bilateral trade, India and the Netherlands continue to collaborate in innovative fields. This paper employs Autoregressive Distributed Lag (ARDL) modelling to analyze the impact of India’s trade with the Netherlands on Indian GDP as well as to examine the impact of Indian GDP on India’s trade with the Netherlands. The paper uses historical data for the period 1995-2022. The paper concludes that while, Indian GDP is not cointegrated with either Indian exports to the Netherlands or with Indian imports from the Netherlands in the long-run, India’s imports have a causal relationship both with its exports and its GDP in the long-run.