This idea has become a dominant discourse in economic development literature. The views expressed in this working paper are those of the authors and do not necessarily represent those of the imf or imf policy. The export led growth hypothesis, advocates that export growth is key in enhancing economic growth yet no consensus has been reached on the causal relationship between the two. An empirical examination of the exportled growth hypothesis in turkey1 sami taban, ismail aktar abstract the exportled growth elg hypothesis postulates a causal connection between export and growth. The conclusions are fairly mixed and often contradict one another.
The basic exportled growth hypothesis posits that the key aspect in the process of fast but sustainable economic growth is boosting the level of exported commodities in an economy. Strategy of exportled growth india economics discussion. Exportled growth hypothesis 475 growth for 9 developing countries and found strong support for the exportled growth hypothesis for all the countries included in their sample. Applying panel cointegration techniques to a production function. There is a considerable literature that investigates the link and causation between exports and economic growth, but the conclusions still. Export expansion will increase productivity by offering greater economies of.
Interestingly, metaanalysis has emerged as a methodological. New evidence and implications abstract previous studies on economic growth have shown that countries that relied on exports to propel their economies have been successful in achieving robust economic growth. The rise and fall of exportled growth levy economics institute. Kaldors hypothesis was that growth of per capita output is determined by the regions ability to exploit economies of scale and the type of activity in which it specialises. Time series data ranging from 1970 to 2009 was used and the study employs unit root testing, cointegration analysis and var granger causalityexogeneity wald tests to analyze annual time series data from nigeria. The study uses three measures of export namely, total export, oil export and non. The export led growth hypothesis claims that export is capable of affecting economic growth by encouraging the domestic producers to use better production techniques and to be more competitive in the world market. The staple theory of primaryexportled growth in order to integrate both historical and theoretical aspects of the export promotion hypothesis, we will adopt the staple theory of primaryexportled growth as the framework of analysis.
Thus, manufacturing reaps greater benefit gains than landbased activity because it has greater scope for productivity gains. Equally importantly, the increase in exports enables a higher level of import absorption to be accommodated so that there is no. Another plausible hypothesis is that negative causality runs from output growth to export growth. Pdf is the exportled growth hypothesis valid for nigeria. It is known as the exportled growth elg hypothesis. Using an exportaugmented neoclassical production function, the validity of the exportled growth hypothesis for mexico is also tested over the period 19602003. A significant concern with this latter model is that it may risk turning global growth into a zerosum game. Thus, the hypothesis predicts that the rate of export growth will cause economywide productivity gains. Empirical results supportthe export led growth hypothesis in zimbabwe and reveal that a longrun relationship exists between exports and export gdp and that the direction of relationship runs from nonexports to export gdp non in both the shortrun. Successfully executed, this strategy generates a flow of money from abroad that the country can then use to strengthen its domestic economy and raise living standards. Exportled growth implies opening domestic markets to foreign. Exportoriented industrialization eoi sometimes called export substitution industrialization esi, export led industrialization eli or exportled growth is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage. Larger exports will contribute to the stock of knowledge and human capital in the economy thereby benefiting all firms. A further examination of the exportled growth hypothesis.
The great recession has surfaced contradictions that were always inherent in exportled growth and globalization and the global economy now confronts a troubling. The results of this study suggest that promoting exports via export promotion policies will contribute to economic growth in jordan. Therefore, economic growth will promote the growth of exports. The estimated results confirmed the importled growth hypothesis for nigeria, guinea, and liberia, a tradeled growth hypothesis for the gambia and. Empirical results supportthe export led growth hypothesis in zimbabwe and reveal that a long run relationship exists between exports and export gdp and that the direction of relationship runs. The study finds that real gdp, real exports, and terms of trade are cointegrated. A further examination of the exportled growth hypothesis econstor. In the next section, we provide an overview of the empirical literature of the exportled growth hypothesis for african countries. Likewise, dutt and ghosh 1996 found support for the exportled growth hypothesis in half of their sample countries. Unity university is export led growth valid for ethiopia.
This paper examined the role of export in the economic growth process in nigeria. They used the technique granger causality to test the direction of the causality between export and economic growth. Exportled development, employment and gender in the era. The exportled growth elg hypothesis postulates export expansion as one of the main determinants of economic growth. That paradigm is part of a consensus among economists about the benefits of economic openness. Introduction there has been, for a long time, a debate regarding the significance of export growth and economic growth in both developed and developing countries. It reflects the view that export oriented policies help to stimulate economic growth. This paper examines the validity of the export led growth hypothesis in kenya for the period 1980 to 2011 using time series data. Realising the great importance of exportpromotion, economists and policymakers are trying to ascertain the role that exports can play in the growth strategy of ldcs like india. The causal relationship between exports and economic. But southsouth trade is partly picking up the slack. Exportled growth, growthdriven export 75 consider at most two countries, but the most extensive studies, afxentiou and serletis 1991, pomponio 1996 and riezman et al. The hypothesis of exportled growth is tested using annual time series data for australia.
Exportexpansion can be a catalyst for output growth both directly, as a component of aggregate output, as well as. Econometric analysis of the exportled growth hypothesis. Journal of international development 23 2, 220a239. This study considers botswanas mineral exports production from 2003q1 to 2012q4 and relates each export. Next we combine equation 2 with equation 1 and obtain. Exportled growth financial definition of exportled growth. It holds that the overall growth of countries can be generated not only by increasing the amounts of labour and capital within the economy, but also by expanding exports.
An econometric analysis of export led growth hypothesis. The role of the exchange rate, money, and government expenditure from korea. The intraindustry trade is raised by exports which helps the country to integrate the global market and causes to reduce the. Developing countries may be moving toward a new version of exportled growth. Kunst and marin 1989 find that the growthdriven export hypothesis cannot be rejected for austria. The analysis reveals that both exports and the gdp series in log levels have unit roots but they do not. The exportled growth hypothesis is tested using quarterly time series data for hong kong, korea, and taiwan and by constructing a vector autoregression var model. This paper examines the validity of the exportled growth elg hypothesis in the context of the jamaican economy, among other selected latin american and caribbean countries. Evidence of developing country crowdingout abstract over the last two decades there has been a dramatic shift in the stance of development policy with importsubstitution being replaced by the exportled growth. Revisited exportled growth hypothesis sage journals. In a recent paper, thomas palley 2002 has argued that after several decades of being presented as the optimal growth strategy, the exportled growth elg model that the east asian countries followed has ultimately given in and even harmed the growth prospects of developing countries. How applicable is exportled growth and importled growth. As exports rise, they inject additional income into the domestic economy and increase total demand for domestically produced output see export multiplier. Pdf export led growth hypothesis nasim shah shirazi.
Mexico and brazil over the past three decades, appeared to provide empirical support for exportled. A note on the exportled growth hypothesis 295 describes the methodology and data while section three presents the empirical results and section four concludes. The opposite of an exportled growth strategy is import substitution. Engle and granger 1987 show that when two variables. Against the backdrop of exportoriented policy reforms to mexicos trade regime in the mid 1980s, the present study undertakes a case study of economic growth in mexico.
This paper challenges the common view that exports generally contribute more to gdp growth than a pure change in export volume, as the exportled growth hypothesis predicts. It is essential to verify these hypothesis so as that proper policies may be formulated to help place the economy on a path of development and maintainable growth. An exportled growth strategy is one where a country seeks economic development by opening itself up to international trade. In this article we will discuss about the strategy of exportled growth. From these results, the study nullifies the export led growth hypothesis and postulates that the botswana economy rather follows. An exportled growth hypothesis which states that exports are keys to promoting economic growth provides one of the answers to this fundamental question. In contrast to the exportled growth hypothesis, scholars such as bhagwati 1988. A nation pursuing exportled growth seeks to expand its economy by producing goods for sale overseas. The export led growth hypothesis elgh postulates that export expansion is one of the key determinants of economic growth. Exportledgrowth, economic growth, trade liberalization.
In addition the study, found unidirectional short run causality from exports and imports to economic growth. Empirical methodology and data to test for the existence of unit roots and identify the order of integration for each variable, the augmented dickeyfuller hereafter adf test. Employing both bivariate exports and gdp and trivariate exports, gdp and exchange rate models, the study finds that exports and gdp are cointegrated for all the four economies, implying that there is a long run. Middleincome countries are driving export diversification of lowincome countries. Also learn about why this policy is not suitable for india. This study investigates elg hypothesis using quarterly time series data for the period 1980.
It also documents, from a gender perspective, the experiences and impacts of the exportled development strategy on employment and labour in. A further examination of the exportled growth hypothesis christian dreger dierk herzer 1 abstract. The exportled growth hypothesis elgh postulates that export expansion is one of the main determinants of growth. According to its advocates, exports can perform as an engine. Pdf this study aims to prove and analyze the effect of export growth on economic growth in the asean. The estimation results support the exportled growth hypothesis for chile and at the. The model uses quarterly and annual time series data from march 1997 to. Export led models of regional growth economics network. Exportled growth is an economic strategy that is also used by islamic countries in asean. The granger nocausality procedure developed by toda and yamamoto 1995 was applied to test the causal link between real export growth and real industrial output growth. An analysis of socalled exportled growth prepared by jie yang1 authorized for distribution by jianhai lin september 2008 abstract this working paper should not be reported as representing the views of the imf. While chinas growth rate continues at a high level, its very low consumption rate per. One reason, as pointed out by bahmanioskooee and alse 1993 is that they have ignored to incorporate the cointegrating properties of exports and output in their testing procedure.
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