From these results, the study nullifies the exportled growth hypothesis and postulates that the botswana economy rather follows the growthdriven exports hypothesis gde. In this article we will discuss about the strategy of export led growth. The hypothesis of export led growth is tested using annual time series data for australia. Pdf is the exportled growth hypothesis valid for nigeria. In a recent paper, thomas palley 2002 has argued that after several decades of being presented as the optimal growth strategy, the export led growth elg model that the east asian countries followed has ultimately given in and even harmed the growth prospects of developing countries. Likewise, dutt and ghosh 1996 found support for the export led growth hypothesis in half of their sample countries. The evidence suggests longrun bidirectional causality between real exports and real gdp. Evidence of developing country crowdingout abstract over the last two decades there has been a dramatic shift in the stance of development policy with importsubstitution being replaced by the exportled growth. The exportled growth hypothesis is analysed for argentina, brazil, and mexico using cointegration and causality techniques. The estimated results confirmed the import led growth hypothesis for nigeria, guinea, and liberia, a trade led growth hypothesis for the gambia and sierra loan and export led growth was supported. Against the backdrop of exportoriented policy reforms to mexicos trade regime in the mid 1980s, the present study undertakes a case study of economic growth in mexico.
The granger causality test results revealed no any support of the export led growth elg hypothesis for tanzania. However, the growthled exports gle hypothesis for tanzania was supported by the results of this study, implying that the government of tanzania needs to promote growth in order to generate exports. Donya brown research and economic programming division. Exportledgrowth, economic growth, trade liberalization. The first is the neoclassical exportled growth hypothesis.
It holds that the overall growth of countries can be generated not only by increasing the amounts of labour and capital within the economy, but also by expanding exports. As a result, the major purpose of including the export and import. The exportled growth elg hypothesis postulates export expansion as one of the main determinants of economic growth. D1, felix obioesio department of economics, university of uyo, nigeria. The estimated results confirmed the importled growth hypothesis for nigeria, guinea, and liberia, a tradeled growth hypothesis for the gambia and. Exportoriented industrialization eoi sometimes called export substitution industrialization esi, export led industrialization eli or exportled growth is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage. Exportled growth, growthdriven export 75 consider at most two countries, but the most extensive studies, afxentiou and serletis 1991, pomponio 1996 and riezman et al. The great recession has surfaced contradictions that were always inherent in export led growth and globalization and the global economy now confronts a troubling. It is essential to verify these hypothesis so as that proper policies may be formulated to help place the economy on a path of development and maintainable growth. Engle and granger 1987 show that when two variables. The export led growth hypothesis, advocates that export growth is key in enhancing economic growth yet no consensus has been reached on the causal relationship between the two. As exports rise, they inject additional income into the domestic economy and increase total demand for domestically produced output see export multiplier.
In the next section, we provide an overview of the empirical literature of the exportled growth hypothesis for african countries. In other words, the question trailed is whether by export promotion the country could impinge on its overall economic development. In a recent paper, thomas palley 2002 has argued that after several decades of being presented as the optimal growth strategy, the exportled growth elg model that the east asian countries followed has ultimately given in and even harmed the growth prospects of developing countries. This paper examines the validity of the export led growth hypothesis in kenya for the period 1980 to 2011 using time series data. The export of commodities and the validity of the export. One reason, as pointed out by bahmanioskooee and alse 1993 is that they have ignored to incorporate the cointegrating properties of exports and output in their testing procedure. Many papers that study this hypothesis analyze the influence of exports on growth as well as the reverse influence the growthled exports gle. A further examination of the export led growth hypothesis christian dreger dierk herzer 1 abstract. This study applies the johansen cointegration test and the granger. This paper aims to investigate the export led growth hypothesis in kenya using annual time series data from 1976 to 2011 and. We measure export orientation by the initial share of total employment in export sectors in a base year in rural u.
The dynamics of relationship between exports, import and. The exportled growth hypothesis elgh postulates that export growth is one of the key determinants of economic growth. A nation pursuing export led growth seeks to expand its economy by producing goods for sale overseas. The results of this study suggest that promoting exports via export promotion policies will contribute to economic growth in jordan. The exportled growth hypothesis and the brazilian exports during the commodity boom period this section presents the main assumptions of the hypothesis considered in this study, in addition to some studies that use it to analyze the relationship between exports and growth in a certain country or region. The export led growth hypothesis claims that export is capable of affecting economic growth by encouraging the domestic producers to use better production techniques and to be more competitive in the world market. Exportled growth implies opening domestic markets to foreign. The granger causality test results revealed no any support of the exportled growth elg hypothesis for tanzania. Realising the great importance of export promotion, economists and policymakers are trying to ascertain the role that exports can play in the growth strategy of ldcs like india. The export led growth hypothesis elgh postulates that export expansion is one of the key determinants of economic growth.
The import led growth hypothesis suggests that economic growth could be driven primarily by growth of imports. The staple theory of primaryexportled growth in order to integrate both historical and theoretical aspects of the export promotion hypothesis, we will adopt the staple theory of primaryexportled growth as the framework of analysis. It reflects the view that export oriented policies help to stimulate economic growth. From these results, the study nullifies the export led growth hypothesis and postulates that the botswana economy rather follows.
Economists behind the exportled growth hypothesis consider that exports can serve as an engine of growth. This socalled hypothesis of exportled growth elg is, as a rule, substantiated. This study examines the exportled growth hypothesis for the case of nigeria. Apr 26, 2020 export led growth is an economic approach that many developing nations attempt to put in place to modernize their societies and increase standards of living.
Thus, the hypothesis predicts that the rate of export growth will cause economywide productivity gains. Despite trade liberalization and export promotion policies pursued over time, kenyas export growth has been sluggish and its contribution to economic growth is still limited. Successfully executed, this strategy generates a flow of money from abroad that the country can then use to strengthen its domestic economy and raise living standards. Figure 2 is the chief exhibit for the exportled growth hypothesis. This study considers botswanas mineral exports production from 2003q1 to 2012q4 and relates each export commodity with the gdp. The study finds that real gdp, real exports, and terms of trade are cointegrated. The views expressed in this working paper are those of the authors and do not necessarily represent those of the imf or imf policy. Is the export led growth hypothesis valid for industrialized countries. Export led growth, economic growth, trade liberalization. Exportled growth is an economic approach that many developing nations attempt to put in place to modernize their societies and increase standards of living.
Using the concept of the balanceofpayments equilibrium bope growth rate, which provides a framework to test the elg hypothesis, we show that the prcs actual longrun growth is well approximated by its bope growth. Economists behind the export led growth hypothesis consider that exports can serve as an engine of growth. Has the tourismled growth hypothesis been validated. Using an exportaugmented neoclassical production function, the validity of the exportled growth hypothesis for mexico is also tested over the period 19602003. The exportled growth hypothesis elgh postulates that export growth is one of the. Abstract the basic theorizing of the elgh is that countries can record significant levels of growth if there could be expansion in the export. This item appears in the following collectionscollege of humanities and social sciences chss. Cointegration isfound for argentina and mexico in both a prebreak and postbreak period, where the break is related to the introduction ofthe nafta. An analysis of socalled exportled growth prepared by jie yang1 authorized for distribution by jianhai lin september 2008 abstract this working paper should not be reported as representing the views of the imf. Is the exportled growth hypothesis valid for nigeria. Journal of international development 23 2, 220a239. Nov 14, 2019 an export led growth strategy is one where a country seeks economic development by opening itself up to international trade.
A further examination of the exportled growth hypothesis econstor. The role of exports in promoting economic growth has been widely acknowledged. If the documents have been made available under an open. However, the growth led exports gle hypothesis for tanzania was supported by the results of this study, implying that the government of tanzania needs to promote growth in order to generate exports. This socalled hypothesis of export led growth elg is, as a rule, substantiated. New evidence and implications abstract previous studies on economic growth have shown that countries that relied on exports to propel their economies have been successful in achieving robust economic growth. A nation pursuing exportled growth seeks to expand its economy by producing goods for sale overseas. The prcs longrun growth through the lens of the exportled. We use export annual time series data for the period 1977 to 2006 in an export augmented aggregate. The exportled growth elg hypothesis postulates a causal connection between export and growth. The opposite of an export led growth strategy is import substitution. In addition, the granger causality test shows that botswanas economy propels exports production.
The hypothesis of exportled growth is tested using annual time series data for australia. Is the exportled growth hypothesis valid for developing countries. If we look back at history, it can be seen that germany is the first country to adopt export led growth idea in 1950s and japan is the second 1960s country. Applying panel cointegration techniques to a production function. A significant concern with this latter model is that it may risk turning global growth into a zerosum game. The prcs longrun growth through the lens of the export. This study examines the validity of the led growth hypothesis in the zimbabwean economy. The opposite of an exportled growth strategy is import substitution. It is based on the principle of finding a market for something on the international stage that cannot be easily or efficiently supplied by other nations. This study considers botswanas mineral exports production from 2003q1 to 2012q4 and relates each export. Export expansion will increase productivity by offering greater economies of. The study is based upon quarterly time series data covering the period from 199697 to 200809.
Palley 2003 expresses concern over the fact that export led model may risk turning global growth into a zerosum game. A note on the export led growth hypothesis 295 describes the methodology and data while section three presents the empirical results and section four concludes. The export led growth hypothesis elgh postulates that export growth is one of the key determinants of economic growth. The export led growth hypothesis postulates that exports are a main determinant of economic growth and the arguments here are as follows. The intraindustry trade is raised by exports which helps the country to integrate the global market and causes to reduce the. The aim of this study is to empirically test the export led growth hypothesis in the republic of macedonia, as small and open economy. This paper tests the export displacement hypothesis by analysing the changing. This paper challenges the common view that exports generally contribute more to gdp growth than a pure change in export volume, as the exportled growth hypothesis predicts. This can happen if one countrys export growth comes by poaching of domestic demand elsewhere or by displacing exports of other countries. Empirical evidence supporting the export led growth elg hypothesis has been mixed and inconclusive.
Till 1970s, the import substitution policy prevailed in most of the developing countries. The basic exportled growth hypothesis posits that the key aspect in the process of fast but sustainable economic growth is boosting the level of exported commodities in an economy. Previous studies on economic growth have shown that countries that relied on exports to propel their economies have been successful in achieving robust economic growth. Introduction there has been, for a long time, a debate regarding the significance of export growth and economic growth in both developed and developing countries. A note on the exportled growth hypothesis 295 describes the methodology and data while section three presents the empirical results and section four concludes.
The export of commodities and the validity of the exportled. A further examination of the exportled growth hypothesis. According to its advocates, exports can perform as an engine. A cointegration and causality approach johnson atan ph. In addition the study, found unidirectional short run causality from exports and imports to economic growth. If the inline pdf is not rendering correctly, you can download the pdf file here. Overall, the results reject the exportled growth hypothesis. The exportgdp ratio rose from virtually zero in korea to more than 30% by the early 1980s, and from around 10% in taiwan to over 40%.
Is the exportled growth hypothesis valid for industrialized. The new growth theory, developed by balassa 1978, suggests that exports have a. Exportled growth hypothesis 475 growth for 9 developing countries and found strong support for the exportled growth hypothesis for all the countries included in their sample. Export oriented industrialization eoi sometimes called export substitution industrialization esi, export led industrialization eli or export led growth is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage. Based on this methodology, a cointegrated relationship is found among the variables of real gdp, labor, exports and exchange rates. In carrying out this task, the study investigates both the causal and dynamic long run nature of the relationship between economic growth and export by using annual time series data from nigeria. The exportled growth hypothesis elgh postulates that export expansion is one of the main determinants of growth.
Exportled growth financial definition of exportled growth. This paper aims to investigate the export led growth hypothesis in kenya using annual time series data from 1976 to 2011 and dynamic time series techniques of vector. Percapita growth rates threeyear moving averages, 195490 source. Export led growth hypothesis 475 growth for 9 developing countries and found strong support for the export led growth hypothesis for all the countries included in their sample. Many previous studies may have been misspecified since they tested the elg hypothesis using bivariate models. The conclusions are fairly mixed and often contradict one another. Overall, the results reject the export led growth hypothesis. The elg hypothesis states that an increase in exports can generate externalities that boost economic growth. To answer this question, we reexamined the exportled growth hypothesis for the period 17901860 using the ardl methodology. An exportled growth strategy is one where a country seeks economic development by opening itself up to international trade. 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. The standard exportled growth model was first formalized by feder 1982, where it was postulated that exports have a positive effect on gdp growth due to the.
Growth relationship in india examine the validity of the exportled growth elg hypothesis implemented in india during the post wto period. That paradigm is part of a consensus among economists about the benefits of economic openness. Realising the great importance of exportpromotion, economists and policymakers are trying to ascertain the role that exports can play in the growth strategy of ldcs like india. Many developing countries like nigeria pursued importsubstitution strategy. Empirical methodology and data to test for the existence of unit roots and identify the order of integration for each variable, the augmented dickeyfuller hereafter adf test. The export led growth hypothesis elgh postulates that export expansion is one of the main determinants of growth.
Strategy of exportled growth india economics discussion. Empirical evidence from selected subsaharan african countries. Pdf there is a generally held belief that an expansion of the exports sector in a country would usually lead to an improved economic growth. This paper analyses the link between exporting and growth performance in kenya using time series data. A further examination of the exportled growth hypothesis christian dreger dierk herzer 1 abstract. Likewise, dutt and ghosh 1996 found support for the exportled growth hypothesis in half of their sample countries. Evidence of developing country crowdingout abstract over the last two decades there has been a dramatic shift in the stance of development policy with importsubstitution being replaced by the export led growth. Export growth is often considered to be a main determinant of the production and employment growth of an economy. Larger exports will contribute to the stock of knowledge and human capital in the economy thereby benefiting all firms. Palley 2003 expresses concern over the fact that exportled model may risk turning global growth into a zerosum game. This consensus has been used to justify globalization. In this article we will discuss about the strategy of exportled growth.
511 190 1325 227 413 333 500 772 248 980 205 1216 148 611 1241 789 1097 171 1544 987 949 574 739 1313 1428 102 1074 1366 617 1073 983 284 630 103 944 600 258 855 1420 356 1326 194 715 833 1188