A Further Examination of the Export-Led Growth Hypothesis

Christian Dreger and Dierk Herzer

No 1149, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: 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. 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: (i) exports have a positive short-run effect on non-export GDP and vice versa (short-run bidirectional causality), (ii) the long-run effect of exports on nonexport output, however, is negative on average, but (iii) there are large differences in the long-run effect of exports on non-export GDP across countries. Cross-sectional regressions indicate that these cross-country differences in the long-run effect of exports on non-export GDP are significantly negatively related to cross-country differences in primary export dependence and business and labor market regulation. In contrast, there is no significant association between the growth effect of exports and the capacity of a country to absorb new knowledge.

Keywords: Export-led growth; Developing countries; Panel cointegration (search for similar items in EconPapers)
JEL-codes: C23 F43 O11 (search for similar items in EconPapers)
Pages: 39 p.
Date: 2011
New Economics Papers: this item is included in nep-dev, nep-fdg and nep-opm
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: A further examination of the export-led growth hypothesis (2013)
Working Paper: A further examination of the export-led growth hypothesis (2011)
Working Paper: A further examination of the export-led growth hypothesis (2010)
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