Empirical Re-Investigation into the Export-Led Growth Hypothesis (ELGH): Evidence from EAC and SADC Economies

Ojo Johnson Adelakun (), Oluwafemi Opeyemi Ojo and Sakhile Mpungose
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Ojo Johnson Adelakun: Economics Department, School of Accounting, Economics & Finance, CLMS, University of KwaZulu-Natal, Westville Campus, Durban P.M.B. 4000, South Africa
Oluwafemi Opeyemi Ojo: AdelakunOJ ECOMOD Laboratory, Ikeja, Lagos P.O. Box 9361, Nigeria
Sakhile Mpungose: Economics Department, School of Accounting, Economics & Finance, CLMS, University of KwaZulu-Natal, Westville Campus, Durban P.M.B. 4000, South Africa

Economies, 2025, vol. 13, issue 6, 1-23

Abstract: The Export-Led Growth Hypothesis (ELGH) posits that expanding exports drive long-run economic growth. While this has held true for several Asian economies, its effectiveness across African regional blocs remains underexplored. This study investigates the validity of ELGH in the East African Community (EAC) and Southern African Development Community (SADC), assessing whether exports significantly contribute to economic growth in these regions. The analysis covers 22 EAC and SADC economies from 1990 to 2022—regions marked by structural transformation efforts, trade liberalisation, and participation in the AfCFTA. A dynamic panel data model based on an augmented Cobb-Douglas production function is estimated using the System Generalised Method of Moments (System GMM) to address endogeneity and reverse causality. Granger causality tests supplement the analysis. Exports and technology significantly enhance GDP growth, while labour and FDI are statistically insignificant. Trade openness negatively affects growth, suggesting vulnerability to external shocks. A bidirectional Granger causality exists between exports and GDP. This study offers the first dynamic, bloc-level empirical evaluation of ELGH across EAC and SADC, incorporating trade-related interactions. Findings affirm ELGH’s relevance and stress the need for export diversification, technological upgrading, and institutional reform for sustained growth in Africa.

Keywords: export-led growth hypothesis (ELGH); dynamic panel modelling; System Generalised Method of Moments (System GMM); EAC; SADC; export; trade openness (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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