In a recent paper, thomas palley 2002 has argued that after several decades of being presented as the optimal growth strategy, the export led growth elg model that the east asian countries followed has ultimately given in and even harmed the growth prospects of developing countries. So, he concludes that exports led growth hypothesis is invalid in case of pakistan. The hypothesis of export led growth is tested using annual time series data for australia. 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. Palley 2003 expresses concern over the fact that export led model may risk turning global growth into a zerosum game. This paper aims to investigate the export led growth hypothesis in kenya using annual time series data from 1976 to 2011 and. The paper has employed toda and yamamoto 1995 procedure for testing for granger noncausality in the augmented vector autoregressive var methodology to analyze the dynamic relationship between export growth and economic growth. Many previous studies may have been misspecified since they tested the elg hypothesis using bivariate models.
The great recession has surfaced contradictions that were always inherent in export led growth and globalization and the global economy now confronts a troubling. The causal relationship between exports and economic. However, the growth led exports gle hypothesis for tanzania was supported by the results of this study, implying that the government of tanzania needs to promote growth in order to generate exports. Using three simultaneous equations representing gdp, agricultural exports, and imports, they. According to these authors, economic growth leads to the enhancement of skills and. Export led growth hypothesis 475 growth for 9 developing countries and found strong support for the export led growth hypothesis for all the countries included in their sample.
Konya 2006 employed seemingly unrelated regression sur method. Some authors have argued that export growth precedes economic growth hence giving a stance to the export led growth elg hypothesis arnade et al. Likewise, dutt and ghosh 1996 found support for the exportled growth hypothesis in half of their sample countries. This consensus has been used to justify globalization. One of the main arguments in support of the hypothesis is that export growth may affect total factor productivity through dynamic spillover effects.
Export oriented industrialization eoi sometimes called export substitution industrialization esi, export led industrialization eli or export led 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. The granger nocausality procedure developed by toda and yamamoto journal of econometrics, 66, 1995 was applied to test. A contradictory posit that economic growth leads to the growth of exports i. Likewise, dutt and ghosh 1996 found support for the export led growth hypothesis in half of their sample countries. The study reported results supporting the leading role of exports for production as they can be seen as exogenous for china. D1, felix obioesio department of economics, university of uyo, nigeria. The export led growth paradigm received renewed attention following the highly successful east asia export led growth strategy during the 1970s and 1980s and especially when compared to the failure of import substitution policies in most of africa and latin america. The purpose of this article is to reinvestigate exports led growth hypothesis in pakistan after trade reforms in the period 19902008. Export led growth, growth driven export 75 consider at most two countries, but the most extensive studies, afxentiou and serletis 1991, pomponio 1996 and riezman et al. So, these factors force exports to be low and it cannot contribute to economic growth of pakistan. Applying panel cointegration techniques to a production function. This study considers botswanas mineral exports production from 2003q1 to 2012q4 and relates each export commodity with the gdp. Evidence offers support for the hypothesis in the short run.
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 export led growth. Journal of international development 23 2, 220a239. Export growth is often considered to be a main determinant of the production and. According to the so called export led growth hypothesis export activity leads economic growth. A further examination of the exportled growth hypothesis. Should a country promote exports to speed up economic growth or should it primarily focus on economic growth, which in turn will generate exports.
A cointegration and causality approach johnson atan ph. Is the exportled growth hypothesis valid for industrialized. A nation pursuing export led growth seeks to expand its economy by producing goods for sale overseas. 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. Nov 14, 2019 export led growth has been a dominant paradigm for industrial development over the last 40 years, but the future may need a new model. The main objective of the study is to investigate the comparative influence of import and export on economic growth of developing countries in the world, using export led growth elg and import led growth ilg hypothesis. Strategy of exportled growth india economics discussion. The standard export led growth model was first formalized by feder 1982, where it was postulated that exports have a positive effect on gdp growth due to the. Comparative analysis between exportled growth and importled. A significant amount of research has been conducted in developed countries and emerging.
In this paper the turkish exportled growth hypothesis is examined from the trade liberalisation process initiated in 1980. This paper challenges the common view that exports generally contribute more to gdp growth than a pure change in export volume, as the export led growth hypothesis predicts. The conclusions are fairly mixed and often contradict one another. The model uses quarterly and annual time series data from march 1997 to. That paradigm is part of a consensus among economists about the benefits of economic openness. Mexico and brazil over the past three decades, appeared to provide empirical support for exportled. Palley new america foundation july 2011 this paper was presented at a conference on the mexican economy organized by the economics department of the university of puebla, puebla, mexico, november 1719, 2010 and at a conference on brazil china. Export led growth hypothesis elgh claims that there is a positive relationship between exports and longrun economic growth. Does the exportled growth hypothesis hold for myanmar. An empirical examination of the exportled growth hypothesis in fiji yenteshwar ram working paper 200301 december 2003 economics department reserve bank of fiji suva fiji the author is grateful to ms resina katafono and mr kishti sen for their valuable suggestions on the draft copies of the paper. Abstract empirical evidence linking exports to economic growth has been mixed and inconclusive. Konya 2006 employed seemingly unrelated regression sur method to test the causality between export and gdp in the oecd countries and the test indicated a mixed. Similarly, henneberry and curry 2010 examine the relationship between agricultural exports and economic growth in pakistan.
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. Export led growth has been a dominant paradigm for industrial development over the last 40 years, but the future may need a new model. Abstract in this paper the turkish exportled growth hypothesis is examined from the trade liberalisation process initiated in 1980. This study considers botswanas mineral exports production from 2003q1 to 2012q4. In this paper we investigate the export led growth hypothesis for canada by.
Using an export augmented neoclassical production function, the validity of the export led growth hypothesis for mexico is also tested over the period 19602003. The export led growth hypothesis elgh postulates that export expansion is one of the key determinants of economic growth. If we look back at history, it can be seen that germany is the first country to adopt export led growth idea in 1950s and japan is the second 1960s country. A further examination of the export led growth hypothesis christian dreger dierk herzer 1 abstract. 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. The estimated results confirmed the import led growth hypothesis for nigeria, guinea, and liberia, a trade led growth hypothesis for the gambia and sierra loan and export led growth was supported. The export led growth hypothesis is tested using quarterly time series data for hong kong, korea, and taiwan and by constructing a vector autoregression var model. A multivariate cointegration and causality evidence for jordan jamal husein. Therefore, economic growth will promote the growth of exports. Other groups of economists have opposed the export led growth approach.
Oxley 1993, using portuguese data, finds no support for the elg hypothesis, quite the reverse, adding fuel to the controversy concerning programmes for growth. In other words, beyond export led growth hypothesis, nonoil export led growth hypothesis also holds in nigeria. The export led growth hypothesis elgh postulates that export expansion is the key determinants of economic growth, thus emphasizing the importance of export in engendering economic growth. The hypothesis of export led growth sees the growth of exports as having a stimulating influence across the economy as a whole in the form of technological spillovers and other externalities. A further examination of the exportled growth hypothesis christian dreger dierk herzer 1 abstract. Arguments for and against the exportled growth hypothesis.
The exportled growth elg strategy has been aimed to enhance the productive capacity of the home economy in international markets while achieving the objective of economic growth saglam and. On the other hand, others have provided evidence in support of the growth led export hypothesis gle by arguing that economic growth. A note on the export led growth hypothesis 295 describes the methodology and data while section three presents the empirical results and section four concludes. Export led growth implies opening domestic markets to foreign. Pdf is the exportled growth hypothesis valid for nigeria. Applying panel cointegration techniques to a production function with non export gdp as the dependent variable, we find for a sample of 45 developing countries that. Essentially, it reflects the view that export oriented policies act as a catalyst for output growth through efficient resource. Lancaster 1980 and krugman 1984 justified this growth led exports orthodoxy. Further, they added that export led growth hypothesis depends on number of other factors that are not in the favor of pakistan. In addition, the granger causality test shows that botswanas economy propels exports production. In the next section, we provide an overview of the empirical literature of the exportled growth hypothesis for african countries. A significant concern with this latter model is that it may risk turning global growth into a zerosum game.
Consider for example the impact of deforestation and overfishing and degradation of land by industrialscale farming. Kunst and marin 1989 find that the growth driven export hypothesis cannot be rejected for austria. Export led growth hypothesis has not only been widely accepted by academics feder 1982, krueger 1990 and evolved into a new conventional wisdom tylor 1981 balassa 1985, but it also has shaped the development of a number of countries as well as the policies of the world bank world bank 1987, gazi salah etal 2010. The issue how an economy can attain economic growth is widely debated and is one of the crucial economic questions. Another plausible hypothesis is that negative causality runs from output growth to export growth. The regression result and the cointegration analysis show that growth evidence of nonoil exports exists in nigeria. From these results, the study nullifies the exportled growth hypothesis and postulates that the botswana economy rather follows the growthdriven exports hypothesis gde. The exportled growth hypothesis postulates that exports are the main determinant of overall economic growth. To answer this question, we reexamined the export led growth hypothesis for the period 17901860 using the ardl methodology. 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. It reflects the view that export oriented policies help to stimulate economic growth. Empirical evidence supporting the export led growth elg hypothesis has been mixed and inconclusive. Department of economics, bindura university of science education.
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. This research study tests the elgh in the case of services exports analyzing annual time series data from 1984 to 20 in sri lanka. The study employs granger nocausality procedure developed by toda and yamamoto in a vector autoregressive model var. 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. Pdf export led growth hypothesis nasim shah shirazi. Till 1970s, the import substitution policy prevailed in most of the developing countries. The export led growth hypothesis elgh postulates that export growth is one of the key determinants of economic growth. The findings also supported a feedback relationship among the variables. This study applies the johansen cointegration test and the granger. This paper examines the validity of the export led growth hypothesis in kenya for the period 1980 to 2011 using time series data.
Export led models of regional growth economics network. Export led growth might be unsustainable if it contributes extraction of natural resources beyond what is required for long term balanced growth to be maintained. Is the exportled growth hypothesis valid for developing countries. This research study tests the elgh in the case of services exports analyzing annual time series data from 1984 to 20 in. How applicable is exportled growth and importled growth. This can happen if one countrys export growth comes by poaching of domestic demand elsewhere or by displacing exports of other countries. Based on this methodology, a cointegrated relationship is found among the variables of real gdp, labor, exports and exchange rates. Overall, export led growth has been important for many countries. The analysis reveals that both exports and the gdp series in log levels have unit roots but they do not. 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.
According to this hy pothesis, countries that a dopt an outward orientation. Pdf is the exportledgrowth hypothesis, valid for egypt. The granger causality test results revealed no any support of the export led growth elg hypothesis for tanzania. Buffie1992 considers how export shocks can produce export led growth ribeiro ramos, 2001. The exportled growth hypothesis is tested by estimating an augmented growth equation on the basis of times series data from china. 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. Most of the remaining episodes 24 cases experienced significant real exchange rate depreciation and are more likely to be characterized by growth driving exports. The exportled growth elg strategy has been aimed to enhance the productive capacity of the home economy in international markets while achieving the objective of economic growth. Relationship between exports, imports, and economic growth in. 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.
It is widely felt that an ldc like india, biased towards exports, can attain fast growth on the domestic front. However, support for the elg hypothesis is not unanimous. Konya 2006 employed seemingly unrelated regression sur method to test the causality between export and gdp in the oecd countries and the test indicated a mixed result. In the next section, we provide an overview of the empirical literature of the export led growth hypothesis for african countries. Thus, manufacturing reaps greater benefit gains than landbased activity because it has greater scope for productivity gains. Exports might exert these externalities because export industries are seen to be prime candidates to lead for various reasons. Is the export led growth hypothesis valid for industrialized countries. The basic export led 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. There are a number of alternative views, one of which contends that, rather, countries experience growth driven exports. Further, tsen 2010 found the evidence for export led growth hypothesis. Empirical results supportthe export led growth hypothesis in zimbabwe and reveal that a long run relationship exists between exports and export.
Project muse testing the exportled growth hypothesis. Exports are often considered as an important source of economic growth. Nurkse 1961 advocated the balanced growth theory, while prebisch 1962 supported the import substitution approach. This paper tests the export displacement hypothesis by analysing the changing. Abstract the basic theorizing of the elgh is that countries can record significant levels of growth if there could be expansion in the export. According to its advocates, exports can perform as an engine. The successful experiences of brazil, taiwan, korea, etc. The exportled growth hypothesis elgh postulates that export expansion is one of the main determinants of growth. Donya brown research and economic programming division. The exportled growth hypothesis is tested using quarterly time series data for australia by constructing a vector autoregression var model. Three distinct features in this paper stand out against. 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. This study examines the validity of the led growth hypothesis in the zimbabwean economy.
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