After taking an build, install the npm package to my new created react app using npm i ../. And imported the component in App.js. But it shows the error that Module not found: Can't resolve 'test-app-npm'. But it's installed in package.json like this "test-app-npm": "file:../testnpm".

created package folder name:"testnpm", created react app folder name:"testapp"

webpack.config.js

var path = require("path");

module.exports = {
  mode: "production",
  entry: "./src/index.js",
  output: {
    path: path.resolve("build"),
    filename: "index.js",
    libraryTarget: "commonjs2",
  },
  module: {
    rules: [
      {
        test: /\.js$/,
        exclude: /node_modules/,
        loader: "babel-loader",
      },
      {
        test: /\.css$/,
        use: ["style-loader", "css-loader"],
      },
    ],
  },
  externals: {
    react: "react",
  },
};

package.json

{
  "name": "test-app-npm",
  "version": "1.0.0",
  "description": "test react app npm release",
  "main": "index.js",
  "scripts": {
    "test": "echo \"Error: no test specified\" && exit 1",
    "build": "webpack"
  },
  "devDependencies": {
    "@babel/core": "^7.16.0",
    "@babel/preset-env": "^7.16.0",
    "@babel/preset-react": "^7.16.0",
    "babel-loader": "^8.2.3",
    "css-loader": "^6.5.0",
    "style-loader": "^3.3.1",
    "webpack": "^5.61.0",
    "webpack-cli": "^4.9.1"
  },
  "dependencies": {
    "react": "^17.0.2"
  },
  "author": "",
  "license": "ISC"
}