Estimating Export Equations for Developing Countries

Sanjesh Kumar

The IUP Journal of Applied Economics, 2009, vol. VIII, issue 2, 17-28

Abstract: : The paper uses annual time series data to estimate the price and income elasticities of export demand for three developing countries Fiji, Papua New Guinea (PNG) and Bangladesh. The LSE-Hendry s general-to-specific approach (known as GETS) is employed by using correct specifications of relative price to find the relevant export elasticities. Income elasticities of export demand are found to be unity for all the three countries. The price elasticity estimates, in contrast, have correct signs, and give plausible magnitudes. Based on the results, exports in developing countries can be seen as an engine for growth, and thus, export promotion policies are necessary to improve trade balance and to achieve greater export-based growth.

Date: 2009
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