A further examination of the export-led growth hypothesis

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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.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1149

Classification and Topics

• Classification: Wirtschaft ; Economic Growth of Open Economies ; Macroeconomic Analyses of Economic Development ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
• Subject: Export-led growth ; Developing countries ; Panel cointegration ; Exportinduziertes Wachstum ; Nicht-handelbares Gut ; Wirtschaftswachstum ; Schätzung ; Entwicklungsländer

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dreger, Christian ; Herzer, Dierk
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/57251