Technological Innovation, External Debt, and Sustainable Economic Growth: Evidence from India

Abstract

The paper aims to analyse the dynamics of technological innovation, sustainable economic growth, FDI, external debt, inflation, and trade in India spanning 1990 to 2024. The ARDL technique is taken because all the variables namely GDP, inflation, external debt, technological innovation, FDI and trade openness are determined to be mixed integration order by the tests of unit root. In this empirical analysis, the short and long run response functions are evaluated with the help of ECM. Empirical results show, in the analyses of long run, the selected variables are cointegrated. In the growth model, external debt, technological innovation and trade are significantly and positively related with sustainable expansion in the long run while consumer price and FDI exert a adverse but not significant relationship with the sustainable growth. The external debt model suggests that FDI is a major factor in lowering external debt, whereas inflation and technological innovation are important long-run factors. Some of the conclusions derived from the results indicate that the technological innovation needs to be enhanced, productive utilization of external borrowing has to be encouraged and trade integration and macroeconomic stability are vital for long-term economic progress in India. The study outlines the bidirectional connection between economic development and overseas debt using a single framework of ARDL, and provides the practical policy suggestions for external debt management and innovation-based economic growth.