An Empirical Note on the Export-Led Growth Hypothesis: The Case of Malaysia

Mansor Ibrahim

Economic Analysis and Policy, 2002, vol. 32, issue 2, 221-232

Abstract: The present empirical note re-examines the export-led growth hypothesis for the case of Malaysia. Using standard procedures of unit root testing, cointegration and error correction modelling, we find evidence for bi-directional causality between exports and real output per capita. Addressing the issue of exogeneity, we test for weak exogeneity and super exogeneity of exports within the error correction framework. We find evidence that exports are not weakly exogenous and subsequently, are not super exogenous. This result weakens the case for the export-led growth hypothesis. In the Malaysian context, the Lucas critique applies, namely, that the relationship between exports and real output per capita is not invariant to policy changes or regime shifts.

Date: 2002
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