A Further Examination of the Export-Led Growth Hypothesis

43 Pages Posted: 14 Sep 2011

See all articles by Christian Dreger

Christian Dreger

European University Viadrina Frankfurt (Oder); IZA Institute of Labor Economics; Chinese Academy of Social Sciences (CASS)

Dierk Herzer

affiliation not provided to SSRN

Date Written: August 2011

Abstract

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.

Keywords: Export-led growth, Developing countries, Panel cointegration

JEL Classification: F43, O11, C23

Suggested Citation

Dreger, Christian and Herzer, Dierk, A Further Examination of the Export-Led Growth Hypothesis (August 2011). DIW Berlin Discussion Paper No. 1149, Available at SSRN: https://ssrn.com/abstract=1927245 or http://dx.doi.org/10.2139/ssrn.1927245

Christian Dreger

European University Viadrina Frankfurt (Oder) ( email )

Frankfurt (Oder)
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chinese Academy of Social Sciences (CASS) ( email )

Beijing, 100732
China

Dierk Herzer (Contact Author)

affiliation not provided to SSRN ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
124
Abstract Views
892
rank
274,200
PlumX Metrics