Export Demand Elasticities as Determinants of Growth: Estimates for Mauritius
Alexis Habiyaremye () and
Thomas Ziesemer ()
No 2008-072, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)
In this paper, we combine the export-led and import-led growth hypotheses in a growth model in which the importation of foreign capital goods and the demand elasticities of own export products explain the growth opportunities and the technical progress of developing countries. This model, based on imported capital goods uses Mauritius' data on capital investment, employment, export partners' growth and terms of trade to estimate price and income elasticities of export demand, total-factor productivity growth and economies of scale. These elasticities are then used to assess how the growth in export partners' income is converted into domestic growth. The implications of the presence of low or high export demand elasticities are discussed by relating them to various strands of trade and growth literature. Based on the results of this estimation, we also calculate steady-state growth rates, engine and handmaiden effects of growth as well as the dynamic steady-state gains from trade for this latecomer export economy. The implications of steady state results are also discussed in the light of the Mauritian employment and growth perspectives.
Keywords: growth models; trade; capital goods; exports; total factor productivity (search for similar items in EconPapers)
JEL-codes: O11 O19 O41 F43 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2008072
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